Compute WACC in Excel under a variety of different equity structures.
- [Instructor] We need to understand how sensitive…a firm's financial position can be to WACC.…To evaluate that issue, I wanna turn to an area…of capital structure that often gets short shrift,…the equity cost of capital for the firm.…I'm in the 03_06_Begin Excel file.…Now, for a lot of firms, equity cost of capital…is something that is very mysterious,…and something they don't think about a lot.…
What, exactly, does equity cost of capital mean?…When we talk about debt cost of capital,…that's fairly intuitive.…The debt cost of capital is the interest rate…that we have to pay on bonds, when we issue them.…That's fairly straightforward.…We look at what our coupon payments,…or our interest rate, is on that debt.…Equity works differently.…When we sell stock to the public,…we probably pay some dividends,…but dividends are only a part…of the return that investors expect.…
Instead, the cost of equity is really about the rate…of return that investors expect on their investment.…That rate of return is gonna differ,…based on the company, and how risky it's perceived to be.…
- 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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