DCF & WACC
Beyond the WACC-weights problem, where does circularity arise inside a levered DCF or three-statement model, and how do you break it?
Model answer
The classic loop: interest expense depends on the debt balance, the debt balance (revolver draw/paydown) depends on the cash flow available, and cash flow depends on interest expense - so the model…
The full, human-reviewed answer is in the bank.
Sign up free and Daily 10 serves you 10 questions a day from all 1,500+ — or go Pro for unlimited reps.
More from DCF & WACC
- Walk me through a DCF.
- Why do you use unlevered free cash flow in a DCF and how do you calculate it?
- What is WACC and how do you calculate it?
- What are the two ways to calculate terminal value, and how do they differ?
- What discount rate do you use if you're discounting levered free cash flow?
- Two identical companies, one has more debt. Which has the higher WACC?