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You need the cost of debt and equity to arrive at your WACC. Does the cost of debt and equity change each year? What could be the reason?
We address this question: “Does the cost of equity and cost of debt change in the projected years when arriving at the WACC? Yes/No? And why?”on this page.
It is common practice to use a single WACC to discount cash flows in a DCF model. This assumes that the debt and equity weights remain the same throughout the forecast period (and often into perpetuity). Is this technically correct?
We address, on this page, the question: “Are the debt and equity weights used to estimate WACC the same every year in a DCF valuation model?”
You need the value of debt and equity to arrive at WACC. If a company’s equity is publicly traded, the value of the equity can be computed using the market price of equity. But how do you get the market value of equity if a company’s equity is privately held (not publicly traded)?
We address, on this page, the question: “How do you arrive at the market value of equity in a privately held business to estimate weights (to arrive at WACC)?”
You need the value of debt to arrive at WACC. If a company’s debt is publically traded, the value of the debt can be computed using the market price of the debt. But how do you get the market value of debt if a company’s debt is partly or fully bank debt (not publicly traded)?
On this page, we address the question “How do you get the market value of debt if a company’s debt is partly or fully bank debt (not publicly traded)?”