Financial Analysis Excel Templates 企业估值模板-betawacc

ESTIMATING THE WEIGHTED AVERAGE COST OF CAPITAL

Input cells are in yellow.

Comparable Companies

Firm 1Firm 2Firm 3Average

DATA Amount of equity200200300

Amount of debt100200200

Tax rate40%35%38%

Equity beta 1.10 1.250.90

RESULT1+ (1-T)D/E 1.30 1.65 1.41

Unlevered equity beta0.850.760.640.75

Project or Acquisition

DATA% Debt40%

% Equity60%

Tax rate40%

RESULT1+ (1-T)D/E 1.40

Unlevered project beta0.75 = average of unlevered equity betas of comparable firms

Project equity beta 1.05

DATA Risk-free rate 6.00% = yield on long-term Treasury bonds

Market risk premium7.40% = historical average excess return of S&P 500

RESULT Project equity beta 1.05

Market risk premium7.40%

Equity risk premium7.74%

Plus risk-free rate 6.00%

Cost of equity13.74%

Note: The estimate of the market risk premium is the arithmetic average from 1927-1997, based on

the Ibbotson Associates "Stocks, Bonds, Bills and Inflation" data.

DATA Cost of debt9.0%

RESULT Weighted

Weights Cost

After-tax cost of debt 5.4%40.0% 2.2%

Cost of equity13.7%

Weighted average cost of capital