Weighted Average Cost of Capital (WACC) is an important input in the process used for determining the value of a firm. In our Corporate Finance First Course we visit this concept as well as the concept of Beta which is an essential ingredient in the Cost of Equity calculation part of the WACC equation. In particular the following two sessions discuss these topics in detail:
- Finance Training Course: Corporate Finance: Opportunity Cost and Cost of Capital
- Finance Training Course: Corporate Finance: Beta, Calculating WACC or Weighted Average Cost of Capital
These concepts as part of a business valuation exercise are more clearly explained through the following two case studies:
- Finance Training Course: Advanced Micro Devisces (AMD) Corporate Finance case study
- Finance Training Course: Electronic Arts (EA) Corporate Finance case study
Finally we look at how Beta may be re-levered to address situations where a firm’s capital structure has undergone change or where data for determining beta for firms will similar business risk is more readily available than for the firm being valued.
Between the two introductory concepts, the two comprehensive cases and the Relevering Beta post above you now have everything you ever needed to learn about Beta within the context of corporate finance and investment banking valuations.