Learn about building a capital structure scenario using Excel.
- [Instructor] Firms use project selection…to identify which projects offer the most upside…to sales and profits,…but a key element in this discussion is cost of capital.…Let's look at an example in Excel to help us understand…what influence capital structure can have…on firm profitability.…I'm in the 03_01_Begin Excel file.…Now, when people do project selection analysis,…they often simply assume a discount rate.…
That's not unreasonable.…Those discount rates are based on risk,…but for a company, we need to be a little bit more precise.…If you're working in a corporate finance vertical,…it's not enough to assume…that the cost of capital should be 6% or 5% or 7%.…Instead, we need to be much more precise about that.…We call this figure,…the discount rate that we're going to use WACC…or the Weighted Average Cost of Capital.…This WACC determines the cost of funding for the firm.…
The WACC is gonna be based on how risky or safe that firm is…with of course an adjustment up or down…for particular projects…based on how risky a particular project is.…
- Capital budgeting in Excel
- Using Excel in project selection
- Analyzing capital structure using Excel
- Estimating weighted average cost of capital (WACC)
- Applying Excel to operational budgeting
- Cash flow budgeting
- Stress test tools for budgets
Skill Level Intermediate
Excel 2016: Power Query (Get & Transform)with Oz du Soleil1h 49m Intermediate
Excel: Analyzing and Visualizing Cash Flowswith Curt Frye1h 16m Intermediate
1. Critical Tasks in Corporate Finance
2. Project Selection in Excel
3. WACC and Capital Structure in Excel
4. Operational Budgeting in Excel
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