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To value a company using enterprise discounted cash flow DCF
To value a company using enterprise discounted cash flow DCF
To value a company using enterprise discounted cash flow DCF, we discount
free cash flow by the weighted average cost of capital (WACC). The weighted
average cost of capital represents the opportunity cost that investors face for
investing their funds in one particular business instead of others with similar
risk. To determine the weighted average cost of capital, calculate its three
components: the cost of equity, the after-tax cost of debt, and the company’s
target capital structure. Since none of the variables is directly observable, we
employ various models, assumptions, and approximations to estimate each
component. In this assignment you will be using financial information from
Henkel AG and selected market data (in Excel) to assist in answering the
questions given below.
