0
Want this question answered?
Be notified when an answer is posted
Add your answer:
Earn +20 pts
What do you mean by horizon value in finding the NPV of a stock?
horizon value = FCF(1+g)/WACC - g where FCF = Free cash flows at current time period or sub zero g= growth rate of firm WACC=weighted average cost of capital ----
What is the advantage of WACC?
All else equal, the weighted average cost of capital (WACC) of a firm increases as the beta and rate of return on equity increases, as an increase in WACC notes a decrease in valuation and a higher risk.
What is after tax wacc?
WACC stands for weighted average cost of capital. So after tax means cost of capital after taxes are taken into account.
What does wacc measure?
WACC is a component used in finance to measure the company's cost of capital, usually as a discounting factor and the companies use debt or equity for financing.
Does lower WACC equal lower NPV?
no it increases npv
What is the relationship between wacc and discount rate of return?
relationship between WACC and required rate of return.
How do you calculate WACC?
how to calculate WACC how to calculate WACC how to calculate WACC how to calculate WACC
Why WACC represents an opportunity cost to investors?
Wacc Farmula
What happens to the WACC when the federal reserve tightens credit?
WACC will increase.
What internal benefits does using WACC offer for a company?
The weighted average cost of capital (WACC) represents a firm's average cost of capital from all sources, including common stock, preferred stock, bonds, and other forms of debt. The weighted average cost of capital is a common way to determine require rate of return because it expresses, in a single number, the return that both bondholders and shareholders demand in order to provide the company with capital. A firm’s WACC is likely to be higher if its stock is relatively volatile or if its debt is seen as risky because investors will demand greater returns.
What do you mean by horizon value in finding the NPV of a stock?
horizon value = FCF(1+g)/WACC - g where FCF = Free cash flows at current time period or sub zero g= growth rate of firm WACC=weighted average cost of capital ----
What impact does WACC have on capital budgeting and structure?
What impact does WACC have on capital budgeting and structure?
Why doesn't everyone calculate WACC the same?
because of WACC nature, there are no same utility, and that's why none make same calculation. so WACC=X2+2X3+5X2=0 ? because of WACC nature, there are no same utility, and that's why none make same calculation. so WACC=X2+2X3+5X2=0 ?
What is the formula for calculating wacc?
The Weighted Average Cost of Capital (WACC) reflects the average 'cost of financing' for a firm. Firms raise money in several ways, such as issuing equity, debt, and preferred stock. The WACC is calculated by taking the (after-tax) 'cost' of each of these forms of financing and multiplying it by the relative proportion of total financing represented by that form of financing.The full formula for WACC is:whererD = The required return of the firm's Debt financing(1-Tc) = The Tax adjustment for interest expense(D/V) = (Debt/Total Value)rE= the firm's cost of equity(E/V) = (Equity/Total Value)V = (D + E), ie Total Firm ValueTo calculate the WACC for a publicly traded company, there is an online WACC Calculator available at http:/www.ThatsWACC.com
What is the advantage of WACC?
All else equal, the weighted average cost of capital (WACC) of a firm increases as the beta and rate of return on equity increases, as an increase in WACC notes a decrease in valuation and a higher risk.
How do you find the weighted average cost of capital at various combinations?
Weighted Average Cost Of Capital - WACC A calculation of a firm's cost of capital in which each category of capital is proportionately weighted. All capital sources - common stock, preferred stock, bonds and any other long-term debt - are included in a WACC calculation. WACC is calculated by multiplying the cost of each capital component by its proportional weight and then summing: Where Re = cost of equity Rd = cost of debt E = market value of the firm's equity D = market value of the firm's debt V = E + D E/V = percentage of financing that is equity D/V = percentage of financing that is debt Tc = corporate tax rate Weighted Average Cost Of Capital - WACC A calculation of a firm's cost of capital in which each category of capital is proportionately weighted. All capital sources - common stock, preferred stock, bonds and any other long-term debt - are included in a WACC calculation. WACC is calculated by multiplying the cost of each capital component by its proportional weight and then summing: WACC= E/V * Re + D/V* Rd*(1-Tc) Where: Re = cost of equity Rd = cost of debt E = market value of the firm's equity D = market value of the firm's debt V = E + D E/V = percentage of financing that is equity D/V = percentage of financing that is debt Tc = corporate tax rate
What is the WACC of Disney corporation?
3
