Why do we use wacc as discount rate

always needed as the WACC is an appropriate discount rate only in the Modigliani- unlevered asset are specified, we can use the standard continuous -time 

Indeed, when I was in investment banking, several clients would use their own cost of “The WACC Fallacy: The Real Effects of Using a Unique Discount Rate”,   2 Jan 2018 Know all about the basics of discount rate calculation and its importance. As a practice we always discount the projected cash flows to a present Most of the companies use WACC as the cost of capital because it is the  Case Study: Sensitivity Analysis WACC, perpetual growth rate The WACC is used to discount the FCFs that we predicted in our scenario analysis. The result is  11 Feb 2017 "Using 8% (WACC in question) assumes that the project will be financed in the same proportion as the What am I missing in the question? In this note, we assert that the correct discount rate for the tax shield is Ku, the return The WACC is defined as the weighted average cost of debt and the cost of If the Capital Asset Pricing Model (CAPM) is used, it can be demonstrated that  We apply the APV-method, the CFE-method and the WACC-method. The project value of tax savings is calculated using the discount rate rD (= 8%). This way  25 Sep 2019 We most commonly use WACC as a discount rate for calculating the net present value (NPV) of a business. WACC is used to evaluate 

Indeed, when I was in investment banking, several clients would use their own cost of “The WACC Fallacy: The Real Effects of Using a Unique Discount Rate”,  

In this analysis, we regress stated discount rates, , of the 64 firms that use WACC as their discount rate directly on the components of WACC. The results are  discount rate is low, for instance, when the division is small. Finally, we measure the value loss due to the WACC fallacy in the context of acquisitions. Bidder  17 Aug 2016 The formula for WACC is a company's percentage equity financing times Now let's look what happens when we use a discount rate of 10%. Indeed, when I was in investment banking, several clients would use their own cost of “The WACC Fallacy: The Real Effects of Using a Unique Discount Rate”,   2 Jan 2018 Know all about the basics of discount rate calculation and its importance. As a practice we always discount the projected cash flows to a present Most of the companies use WACC as the cost of capital because it is the 

Hey all, I am seeking some input regarding the WACCs/discount rates you use to find the NPV for before- and after-tax cash flows. I am looking at a NNN retail deal  

And more on why WACC doesn't make any sense as a discount rate can be found here. Conclusion. When doing a DCF calculation the discount rate that you should use is your required rate of return

2 Sep 2014 What exactly is the discount rate and how does it work? What discount rate should I use in my analysis? These are all important questions to ask, 

And more on why WACC doesn't make any sense as a discount rate can be found here. Conclusion When doing a DCF calculation the discount rate that you should use is your required rate of return, not And more on why WACC doesn't make any sense as a discount rate can be found here. Conclusion. When doing a DCF calculation the discount rate that you should use is your required rate of return Why is WACC a more appropriate discount rate when doing capital budgeting? We get in the habit of doing it because we think it looks nicer and we never know exactly where a capital will be

costs of a project and its feasibility, for a given output, depend on three factors: (i) the The discount rate is the opportunity cost of capital (as a percentage of the energy projects financed by the government use a different discount rate than that present value using the utility's weighted-average cost of capital ( WACC).

1 Apr 2019 Discount rates and hence the WACC are project specific! 8 When its debt is not too risky (and its D/V is stable), we can use: Use the comps'. In this analysis, we regress stated discount rates, , of the 64 firms that use WACC as their discount rate directly on the components of WACC. The results are  discount rate is low, for instance, when the division is small. Finally, we measure the value loss due to the WACC fallacy in the context of acquisitions. Bidder 

And more on why WACC doesn't make any sense as a discount rate can be found here. Conclusion When doing a DCF calculation the discount rate that you should use is your required rate of return, not And more on why WACC doesn't make any sense as a discount rate can be found here. Conclusion. When doing a DCF calculation the discount rate that you should use is your required rate of return Why is WACC a more appropriate discount rate when doing capital budgeting? We get in the habit of doing it because we think it looks nicer and we never know exactly where a capital will be