Hey there - was hoping someone could lend a hand.
It has been some time since I built a DCF model. After looking at the template that I originally learned from, which assumes that the fictitious company pays down a decent chunk of debt each year in the analysis, I am struggling to understand how come the NPV calc for both the first 5 yr stage of the model and the terminal value all use the same WACC?
Shouldn’t we be using a different WACC each year? Is it solely because too many assumptions are needed in order to do this? Or is it b/c we are working towards the target capital structure?
Capital structure is changing…how come the WACC isn’t?
Any and all help would be much appreciated! Please and thanks