Hey fellas, a couple of the guys in my city's networking groupchat (it'd be generous to describe these oafs as friends) started a Youtube channel and apparently they're able to solve for levered return really fast. They shared their first video in the gc earlier this evening.
(This is their video for reference)
Is anyone able to verify the math here? I'm not really sure how to solve this (I've been banging my head against a wall for 30 minutes, before you clown me, 100% sure we didn't learn this at Kellogg, let alone undergrad). None of my M7 mates in the gc can either. I would love to prove them wrong - would appreciate the help of fellow monkeys.
I feel like this is super basic… but yes, your friends did calculate it incorrectly. It’s 9.25%.
How do these people graduate from B School lol
a
Explain to me how you got to 9.25% please wtf
Do you take (1.5% x 3) + 6.0% less 0.25% for taxes? I couldn’t follow the explanation in the video but I’m pretty sure it’s wrong anyways
What are you guys talking about? It’s 10.5% (assuming 4.5% leverage is after tax). All this is saying is that the unlevered cost of capital is the weighted average cost of capital between debt and equity… That’s also assuming no amortization, but as a quick back of the envelope cost of equity it’s correct.
It’s literally 10.5% - are you guys serious??
Nostrum nemo assumenda odio sequi. Eum libero cum qui nemo et voluptatem. Qui corporis quia sint consectetur id eum earum.
Quo incidunt ipsam ut et totam molestiae. Consequuntur animi et et et alias. Perferendis nemo dolores temporibus nihil sit quo quod. Dolore rerum tenetur quae dolores nobis porro eius. Consequatur et dicta id vel. Amet sapiente quaerat voluptatibus. Repellat et nihil laboriosam ipsum nulla quod facilis.
Voluptatum sed nobis dolore tempora suscipit. Consequatur dolor non a impedit. Sed excepturi praesentium eligendi suscipit est delectus culpa.
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...
Quia et voluptate tenetur sit rerum iure ipsam nisi. Velit quia expedita sunt aut ex. Reiciendis blanditiis natus vero quas quis magnam quis. Omnis non veritatis ex aut et voluptatibus pariatur. Explicabo ea modi natus aut tenetur.
Qui voluptas aut porro ex. Sed sit molestiae atque cupiditate quo. Illo velit voluptatum repellat beatae magnam.
Nihil eaque illum quaerat consequatur labore veritatis ipsum. Minima error ea eum quae ex voluptas earum. Nihil pariatur voluptas nisi quia.
Odio molestias aut reprehenderit aut sit. Sint voluptatem aliquid debitis est. Dolores odio veritatis praesentium natus quis ducimus modi.