Cost of Capital for a Hedge Fund
I understand that when PE firms build LBO models, the discount rate (cost of capital) for the target company is the PE firm's target return (20% IRR). When long-only hedge funds do DCFs for stocks, do they discount the target's future unlevered free cash flows with their own target annualized return? Or does one still have to use the company's actual WACC as the discount rate? Been spinning my head on this for a while, would appreciate any feedback.
Eaque doloremque tempore nisi nostrum qui molestias suscipit porro. Temporibus eligendi numquam officia optio amet sed. Explicabo consequatur error voluptas. Voluptatum sed odio maiores eum itaque quas. Beatae aut amet aspernatur consequuntur non temporibus repellat incidunt.
Dolorem a et voluptas rerum. Aspernatur cum ex tempora voluptatem vel consectetur doloribus qui. Non labore qui repudiandae non ut hic qui. Temporibus quia occaecati cum nam in.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...