Estimating the Weighted Average Cost of Capital


This spreadsheet shows to estimate the equity beta for a project using the betas of comparable companies and adjusting the for effect of leverage. The equity beta, market risk premium, and risk-free rate determine the cost of equity, according to the Capital Asset Pricing Model. The equity beta is combined with the after-tax cost of debt to compute the weighted average cost of capital.
Source: Professor Kerry Back (Washington University in St. Louis)
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Subjects: Finance, Spreadsheets
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