Here's the question you clicked on:

55 members online
  • 0 replying
  • 0 viewing

toffer

  • 4 years ago

Hi, I'm a bit confused about Apple's wacc (doing a school valuation). How does the 66b$ in cash come into play when estimating their wacc?

  • This Question is Closed
  1. gloomberg
    • 4 years ago
    Best Response
    You've already chosen the best response.
    Medals 1

    doesn't play any role... WACC involves only debt and equity... or perhaps! how much debt more you could leverage on to seek for more debt, so-called optimal capital structure... but i doubt it.

  2. toffer
    • 4 years ago
    Best Response
    You've already chosen the best response.
    Medals 0

    Ok, I can't see any reason for them to lever up anytime soon, and there will be no optimal capital structure analysis. So you're saying that since they have no debt I can simply use the cost of equity to discount future cash flows to firm and add the financial assets to arrive at the quity value?

  3. Vinicius_Caldas
    • 4 years ago
    Best Response
    You've already chosen the best response.
    Medals 0

    If a firm doesn´t have debt, its WACC is equal to cost of equity. Your problem will be choose the best method to find the Ke. Among all methods are CAPM, APM, 3-factor model and others.

  4. Not the answer you are looking for?
    Search for more explanations.

    • Attachments:

Ask your own question

Sign Up
Find more explanations on OpenStudy
Privacy Policy