DCF & WACC
Walk through a numerical WACC calculation: equity $600M, debt $400M, Re = 12%, pre-tax Rd = 6%, tax = 25%.
Model answer
V = 600 + 400 = $1,000M. Equity weight = 600/1000 = 60%; debt weight = 400/1000 = 40%. After-tax cost of debt = 6% x (1 - 0.25) =…
The full, human-reviewed answer is in the bank.
Sign up free and Daily 10 serves you 10 questions a day from all 2,300+ — or go Pro for unlimited reps.
Pro unlocks every model answer — $19.99/mo.
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?
Try the real thing
1 / 3LBO & Paper LBO
What is a leveraged buyout?
Superday coming up? Take the cheat sheet.
The technicals and stories to have cold before you walk in — free, one email, no mailing list.
Free tier: 20 cards + 10 daily reps + ALL drills — no credit card required.