Valutico

FEBRUARY 27, 2024

In DCF analysis, the Weighted Average Cost of Capital (WACC), representing the average return required by all stakeholders, is commonly used as the discount rate. The discount rate must be carefully chosen to reflect unique company risks and characteristics, and also changes in economic conditions.

Discounted Cash Flow 52

Discounted Cash Flow Risk Premium Risk-free Rate Beta 52

Andrew Stolz

AUGUST 5, 2020

When an investor buys a particular security, they consider the risk of that security relative to the riskiness of the overall market and adjust the equity risk premium up or down by using Beta. What Impacts the Capital Asset Pricing Model? Investments are exposed to two types of risk: systematic and unsystematic.

Risk-free Rate 52

Risk-free Rate Beta Weighted Average Cost of Capital Risk Premium 52

Andrew Stolz

MARCH 20, 2020

Weight average cost of capital (WACC) is a calculation of a firm’s cost of capital which includes all sources of capital such as common stocks, preferred stocks, and bonds. A firm uses a mix of equity and debt to minimize the cost of capital. The formula is expressed in the following.

Beta 52

Beta Capital Structure Risk-free Rate Weighted Average Cost of Capital 52

Valutico

OCTOBER 20, 2022

d is the discount rate (which is usually the weighted average cost of capital (WACC), r in our previous example). Ce = Cost of Equity. Rf = Risk-free Rate. B = Beta. (Rm Rm – Rf) = Equity Market Risk Premium. Cp = Cost of Equity Premium. Cost of Debt. Market Return.

Discounted Cash Flow 52

Discounted Cash Flow Terminal Value Weighted Average Cost of Capital Net Present Value 52