Is it possible to use a constant WACC in valuation
Is this possible to use a constant WACC in the valuation of a company along with a changing debt?
Expert
The WACC can only be constant theoretically; if a constant debt is expected. If the debt changes from one year to the subsequent, the WACC changes too. In turn to value companies wherein debt changes dramatically, the Adjusted Present Value (AVP) is easier and more intuitive.
This is possible to use a constant WACC that is the weighted average of the WACC of the different years while debt changes, but this is a number that does not contain anything to do with the WACC in an exact year.
I need the answers for the midterm exam for FIN6000
XYZ Company is interested in purchasing a new corporate jet for $6 million. This will depreciate the jet completely in 5 years and then sell it for $5 million. The jet will utilize $60,000 in fuel annually, and its maintenance will be $40,000 yearly. The tax rate of X
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 the branching structure of the binomial model.
A company with a market capitalization of $100 million has no debt and a beta of 0.8. What will its beta be after it borrows $50 million (giving that there are no other changes and no taxes)?
Who was the first to quantify the idea of Brownian motion?
FedEx would like to acquire 300 vans for its business. It can buy each van for $35,000, depreciate it completely over 5 years, and then sell it for $10,000. The tax rate of FedEx is 30%, and its cost of debt is 10%. Avis Fleet Rental will lease these vans to FedEx for
What is a 3 x 1 Split?
Are there any methods to analyze and to value seasonal businesses?
How can we compute a company's cost of capital in emerging nations, particularly when there is no state bond that we could take as a reference?
18,76,764
1951396 Asked
3,689
Active Tutors
1420206
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!