Does using the cost of equity as your discount rate in a DCF lower your valuation for companies with high amounts of debt?

If you use the cost of equity instead of WACC ( and changing FCFF to FCFE) as your discount rate, would this disadvantage companies with higher leverage?

1 Comments
 

Molestiae sit nihil et quo veritatis beatae libero. Praesentium nam error non consectetur. Quisquam modi voluptatem similique ex voluptas quo. Saepe suscipit cumque itaque molestiae est veniam. Quae quia aut aut.

Velit omnis labore vel in odit. Numquam et cum aliquam ducimus. Possimus animi voluptas sed hic. Ut enim nihil consequuntur cum quis autem cupiditate atque.

Minima minima velit iure ullam. Cum illum unde id aliquid ex commodi omnis molestiae. Sed voluptas eius repudiandae.

Dolorem corporis quo omnis consequatur adipisci. Fugiat debitis itaque eveniet sint.

Career Advancement Opportunities

October 2026 Investment Banking

  • Evercore 01 99.5%
  • Moelis & Company 01 99.0%
  • JPMorgan 01 98.4%
  • Guggenheim Partners 02 97.9%
  • Morgan Stanley 06 97.4%

Overall Employee Satisfaction

October 2026 Investment Banking

  • Moelis & Company No 99.5%
  • Morgan Stanley 02 99.0%
  • Evercore 01 98.4%
  • Banco Santander 02 97.9%
  • BMO Capital Markets 13 97.4%

Professional Growth Opportunities

October 2026 Investment Banking

  • Evercore 01 99.5%
  • Moelis & Company 01 99.0%
  • Morgan Stanley 05 98.4%
  • Goldman Sachs 01 97.9%
  • JPMorgan No 97.4%

Total Avg Compensation

October 2026 Investment Banking

  • Vice President (16) $429
  • Associates (57) $264
  • 3rd+ Year Analyst (8) $210
  • 2nd Year Analyst (28) $184
  • Intern/Summer Associate (16) $161
  • 1st Year Analyst (84) $151
  • Intern/Summer Analyst (76) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
kanon's picture
kanon
99.0
3
Secyh62's picture
Secyh62
99.0
4
BankonBanking's picture
BankonBanking
99.0
5
dosk17's picture
dosk17
98.9
6
GameTheory's picture
GameTheory
98.9
7
DrApeman's picture
DrApeman
98.9
8
Betsy Massar's picture
Betsy Massar
98.9
9
CompBanker's picture
CompBanker
98.9
10
numi's picture
numi
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”