Explain about changing debt, Financial Management

Assignment Help:

Is it possible to use a constant WACC in the valuation of a company with a changing debt?

Theoretically, the WACC can only be constant if a constant debt is expected. If the debt changes from one year to the next, the WACC changes as well. In order to value companies in which debt changes dramatically, the APV (Adjusted Present Value) is simpler and more intuitive. It is possible to use a constant WACC (the weighted average of the WACC of the dissimilar years) when debt changes, but it is a number that does not have anything to do with the WACC in a certain year.

 


Related Discussions:- Explain about changing debt

What are the time dimensions of the income statement, What are the time dim...

What are the time dimensions of the income statement, the balance sheet, and the statement of cash flows? Hint: Are they videos or still pictures?  Explain. Sol. The i

Strategies to achieve financial targets, The XYZ company supplies products ...

The XYZ company supplies products to a number of original equipment manufacturers (OEM's). It employs 5,000 mostly unionized workers and generates about $2.2 billion in revenue ann

Explain the concepts of planning the work, Explain the concepts of Planning...

Explain the concepts of Planning the work Determine scope and objective of the audit (to verify assets, to check adequacy of internal controls etc...). Ensuring appropr

Calculate irr and npv rate, Question 1 You have been asked by the pres...

Question 1 You have been asked by the president of your company to evaluate the proposed acquisition of a new special purpose truck. The truck's basic price is Rs.50,000 and i

Show gross vs net working capital, Q. Show Gross Vs net working capital? ...

Q. Show Gross Vs net working capital? The distinction between the gross working capital or the net working capital does not in any way undermine the relevance of the concepts o

Financial management, BigGardens Ltd (BigGardens) is a private company that...

BigGardens Ltd (BigGardens) is a private company that owns and operates a chain of garden centres in the Bristol area.  The company has expanded rapidly over recent years, opening

Define minimum price make producers as a whole worse off, Suppose the gover...

Suppose the government regulates the price of a good to be no lower than some minimum level. Can such a minimum price make producers as a whole worse off?  Explain. As a higher

Illustrations of substantive tests, Illustrations of substantive tests ...

Illustrations of substantive tests Agree a sample of wages payments to the existence of these individuals and personnel records. Agree a sample of cashbook payments to

Public corporations ought to tender audited financial statem, What are some...

What are some of the government requirements imposed on a public corporation that are not imposed on a private, closely held corporation? Public corporations ought to tender au

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd