Question: After completing your DCF valuation, you noticed the resulting Implied Equity Value per share is too low. Which of the following would increase the Equity
After completing your DCF valuation, you noticed the resulting Implied Equity Value per share is too low. Which of the following would increase the Equity Value per Share in your analysis?
- Increase net debt amount
- Increase the perpetuity growth rate for terminal value
- Increase the debt weighting while calculating WACC
- Decrease the companys beta
- Employ the mid-year convention instead of discounting from year-end
A. 1, 2, and 5
B. 1, 3, and 4
C, 2, 3, and 5
D. 2, 3, 4, and 5
F. All of the above
You have calculated the WACC for a Company and noticed that it is too high. To reduce it, you could:
- Increase the tax rate
- Increase the Equity weighting in the WACC calculation
- Decrease the Risk-Free rate
- Increase the Equity Risk Premium
- Decrease the Perpetuity Growth Rate
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