Hello, I need some help in estimating WACC of a firm which has its manufacturing base in India but has say all its sales to the US. In such a case, should one take a US WACC for the firm or India WACC. If I take the US WACC, should I need to adjust for country risk (currency risk etc). Appreciate your help on this. Many many thanks.
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I'd say calculate the cost of equity using US values and adjust it for country risk in India.
We always would look at the country where it is being manufactured. In today's time where the US govt. is more likely to default compared to indian goverment I would prefer to take Indian 10 year bond rates as risk free return.