Subject category:
Finance, Accounting and Control
Published by:
Darden Business Publishing
Version: 27 August 1999
Share a link:
https://casecent.re/p/73
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Abstract
This technical note compares two methods of treating debt usage in discounted-cash-flow valuation of investment projects or companies. The note illustrates that the Weighted Average Cost of Capital approach (WACC) and the Equity Residual approach (ER) yield equivalent results if consistent assumptions are used.
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Abstract
This technical note compares two methods of treating debt usage in discounted-cash-flow valuation of investment projects or companies. The note illustrates that the Weighted Average Cost of Capital approach (WACC) and the Equity Residual approach (ER) yield equivalent results if consistent assumptions are used.