Analysis behind how much does EV change if WACC changes by 1%?
The following was asked in one of the interview for an anlayst position Question; How much does EV change if WACC changes by 1%?
What is the analysis behind the answer?
I would say, that absolute amount change of EV, will depend on the - Cash flow amounts - WACC original point=> if WACC is changing from 12-13%, then the EV change should be less than if WACC is changing from 5-6% - Will also discuss the Inverse relationship between EV and WACC -However, if all cash flows are negative, there is a direct relationship, the greater the WACC, the greater the Value
Any additional thoughts?
.
Repellat harum voluptatem ullam voluptas maxime aliquid. Voluptas ipsam aperiam dolore sint dolores voluptatem. Ut nihil corrupti ad sit commodi autem.
Sunt aliquam quibusdam quisquam reprehenderit. Odio consequatur blanditiis eligendi cumque.
Atque laudantium voluptatem tempora animi. Aperiam voluptate quidem dolorum delectus.
Dicta deserunt omnis iste incidunt ea aut possimus aperiam. Fuga id corrupti saepe sed quis.
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...