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July 31, 2026
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You certainly can leave it out of the WACC, but then in that case you'll be discounting FCFF at the unlevered cost of capital and then adding the present value of tax shields to arrive at the enterprise value; this enterprise value will be identical to the enterprise value derived from the WACC method. See "APV Valuation Method" for more context.
But is it also possible to leave it out at the WACC and then not calculate NOPAT in the CF but rather only subtract the actual taxes, as tax shield is now not part of WACC anymore?
You could build out something from net income, so levered free cash flow, which would get you to equity value. And then u could go from equity value to enterprise value.
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