Weighted Average Cost of Capital (WACC) is an important measure for determining the worth of value of a firm or a potential investment. In our Corporate Finance First Course we visit this concept as well as the concept of Beta which is an essential ingredient in the Cost of Equity part of the WACC equation. In particular the following two sessions of the course discuss these topics in detail:
i) Session V-A: Corporate Finance: Opportunity Cost and Cost of Capital
ii) Session V – B: Corporate Finance: Beta, Calculating WACC or Weighted Average Cost of Capital
These concepts are more clearly explained through the following case studies:
a) The Advanced Micro Devices (AMD) case study
b) The Electronic Arts (EA) case study
Finally we look at how Beta may be re-levered to address situations where a firms capital structure has undergone change or where data for determining beta for firms will similar business risk is more readily available than for the firm being valued.
Corporate Finance Training: WACC: Calculating weighted average cost of capital: Relevering Beta
In this Finance Training Course we have addressed Beta and WACC which are important to the Corporate Finance Valuation Process.