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toffer
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?
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.
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?
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.