DCF for a company with very high debt
Is it appropriate to use DCF when looking at a company with a lot of debt?
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The WACC used in the DCF is based on an optimal capital structure generally gathered from guideline companies. The resulting value from the DCF is an Enterprise Value of the business. Not sure what your trying to get to here, but you could deduct the actual debt and non-operating assets/liabilities to get to a true equity value of the business. A high level of debt would consume a lot of the equity value.
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