In which cases use different WACCs
Is this possible to use different WACCs within order to discount each year’s flows? In which cases?
Expert
Yes, this is possible. The WACC can only be constant while a constant debt is expected. When debt changes from one year to the next, therefore the WACC also changes from one year to the next, as per to the formula:
WACCt = [Et-1 Ket + Dt-1 Kdt (1–T)] / [Et-1 + Dt-1]
Ke is the required return to equity, Kd is the cost of debt and T is the effective rate of income tax. Et-1 and Dt-1 are the values of the shares and the debt that are acquired in the valuation. Such formula for WACC means that the value of the debt coincides along with its book value.
Is this true that a company creates value for its shareholders in a year when this distributes dividends or when the quotation of the shares increases?
Financial Analysis: It is the investigation and interpretation of financial statements and associated financial reports. Trained and certified accountants generally complete this kind of analysis. The role of a financial analyst is to
Our company (A) is going to buy the other company (B). We need to value the shares of B and, thus, we will use three options of the structure Debt/Shareholders’ Equity in order to obtain the WACC as: 1) Present structure of A
Explain useful properties of low-discrepancy sequence theory or quasi random number theory.
Write some point regarding Market for Corporate Bonds.
Active vs. Passive fund managers: Passive fund managers adopt a long term buy and hold strategy. Usually, stocks are purchased so that the portfolio’s returns will track those of an
Is PER an excellent guide to investments?
You are required to submit a bid to supply 200,000,000 widgets per year to the State of Illinois for the next five years. Your company has an idle tract of real estate that cost $1,500,000 ten years ago; if your company sold the land today, it would generate $3,000,000 after the taxes were paid. The
Initial public offering: An initial public offering (IPO) otherwise called as stock market launch, is the first time company selling stock to public. Usually raised for capital expansion and to become publicly traded company. Investment banking firms
The financial ratios of a firm are as follows. Current ratio = 1.33 Acid-test ratio = 0.80 Current liabilities = 40,000 Inventory turnover ratio = 6 What is the sales of the firm?
18,76,764
1930178 Asked
3,689
Active Tutors
1421800
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!