1 - When finding EVA/Economic Profit do you use the market values for D&E in the $WACC calc? 2- Are we expected to find the discount rate for emerging market WACC? 3-What is information asymmetry? 4-What is informational complexity? Thanks guys!
bump
AJF Wrote: ------------------------------------------------------- > 1 - When finding EVA/Economic Profit do you use > the market values for D&E in the $WACC calc? > 2- Are we expected to find the discount rate for > emerging market WACC? > 3-What is information asymmetry? > 4-What is informational complexity? > > > Thanks guys! 1. No, BV. This can also be calculated as NWC + Net PPP 2. Don’t know 3. Managers know more about a company than the shareholders. 4. Don’t know
AJF Wrote: ------------------------------------------------------- > 1 - When finding EVA/Economic Profit do you use > the market values for D&E in the $WACC calc? > 2- Are we expected to find the discount rate for > emerging market WACC? > 3-What is information asymmetry? > 4-What is informational complexity? 1- BV for the invested capital, for WACC… i can’t believe i forgot. don’t know 2- it’s in the curriculum so anything is game 3- this is a cost of financial distress 4- not sure but i think i recall it from a hedge fund risk
- To clarify, no for invested capital, yes for WACC.
thanks. actually i think one of last year’s questions had an option of using BV or MV for WACC
Check me on this: Invested capital = BV of long term debt + BV of equity = Current assets - current liability + fixed assets (not including PPE) The second equation I got from Schweser
Your first equation is right. I’m pretty sure the second equation is NWC (CA-CL) + Net PPE