I have a question about valuation hoping anyone could help.
I have a private high-tech company with positive income for 3 years. I would like to use industry average D/V, E/V ratio to calculate WACC and Beta for the cost of equity. However, this company has about 40% preferred stock. The WACC= D/Vcost debt(1-Tax%)+E/VCost of equity+Preferred/VCost of Preferred stock. Here I can't get industry average D/V, E/V, and P/V since most companies won't have that much preferred stock. But If I don't use the industry average I don't know how to calculate the market value of equity and preferred stock.
I would really appreciate if anyone could help me to answer this question.
Thanks
Why do you want to use industry average debt/value and equity/value, instead of your own company's ratios? You should know what the overall value of your company is and how much of its capital is equity, debt, preferred, right?
I don't think it is correct to use industry average capital structure since it can be so different from company to company. I would think you would have more difficulty actually calculating the various costs of capital than getting the structure.
Mistakes were made- turns out you should use average D-E ratio or assume it moves to this over time.
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