WACC and Levererd Beta, D/E ratio or Net Debt/equity ratio?
My questions is how to compute a WACC with a firm that possess a lot of cas (ex:Apple?)
Do need to reflect the cash position in the calcul of the levered beta and the wacc or do i need to use only the D/E ratio?
Thanks all
I believe the value of the cash would be reflected in your equity cost. You shouldn't need to add anything additional just because a company has more cash on hand, in reality the effect it might present is that you may be able to secure cheaper debt financing because of your cash position, but that isn't a given, so you really shouldn't change it.
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