# Tag Info

### When calculating theoretical futuresprices for oil, how do you calculate the storage costs?

The theoretical futures cost would be spot price plus funding cost, i.e. WACC (that of the average market participant, not yours), plus the cost of storage, plus the cost of taking the oil out of ...
• 1,671

### Calculation for WACC for commercial banks

It depends what you meant by “bank”. For example in the case of Bank of America, the deposit taking entity is Bank of America NA (BANA) which is a wholly owned subsidiary of Bank of America Corp (BAC)....
• 17.4k

### Calculating a firm's cost of debt using bond issues

I'm no expert of WACC or company finance, etc. But from a pure bond pricing/trading perspective, bond price embodies at least two risks: interest rate credit (i.e., the company defaults) If a bond ...
• 194

### Choosing WACC Tax Rate

The various forms of the Capital Asset Pricing Model, as well as Black-Scholes, are built on top of the axioms of Frequentist Decision Theory. An assumption in the model is that the parameters are ...
• 4,309
1 vote

### Should the targeted rate of return stay the same regardless of the currency?

Point of clarification : are you asking about required returns in pounds sterling for projects conducted in the UK? If so, you also need to adjust for any difference in risk free interest rates ...
• 17.4k
1 vote

### Should the targeted rate of return stay the same regardless of the currency?

It depends. Is the project being carried in the original place or moving to the UK? If the project keeps being in the original place (i.e. euro zone) and you want the IRR in GBP, then you need ...
• 8,551
1 vote

### Choosing WACC Tax Rate

If you are trying to determine the quarterly WACC your tax rate needs to be quarterly as well. Personally, I would take a look at the change in income tax expense. You can also try experimenting with ...
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1 vote
Accepted

### Calculation for WACC for commercial banks

You should definitely omit deposits in my view. The calculation of WACC is based on equity capital and debt capital that a firm uses to fund itself. Banks are not allowed to use customer deposits to ...
• 1,671
1 vote

### Why is there inconsistency in WACC vs unlevered return?

In fact, the WACC is misinforming us; it is neither a cost nor a required return but a weighted average of a cost and a required return. The corporate finance community promotes the WACC as a ...
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1 vote

### Why is there inconsistency in WACC vs unlevered return?

There may be two points you are missing: You are allowed to apply the CAPM to calculate the cost of equity $R_e$. However, one of the CAPM assumptions is, that taxes are not taken into account into ...
• 2,946
1 vote

### Does WACC not depend on the cost of debt?

As noted in the comments, you arrive at the correct conclusion, given your assumptions. This result is usually referred to as the Modigliani-Miller theorem: The basic theorem states that in the ...
• 1,345
1 vote

### What is the influence of inflation on the Wacc?

The WACC (weighted average cost of capital) formula is a weighted average of the cost of equity and the cost of debt weighted by their respective size (see investopedia definition here). As such, it ...
• 460
1 vote

### Valuing equity of a firm using WACC gives incorrect results

If it helps, this class of problems has a non-existence proof tied to them. Mean-variance finance models have an assumption that all parameters are known built into the proofs. There is an existing ...
• 4,309
1 vote

### Valuing equity of a firm using WACC gives incorrect results

Modigliani Miller (MM) tells us that leverage should not affect the value of a firm (under idealized conditions). I think the problem that your are encountering is due to the ambiguous "required ...
• 3,015

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