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Corporate Finance > Lecture 3/4 > Flashcards

Lecture 3/4 Flashcards

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1
Q

PV - tax shield

A

tax shields (t x rd x D) / interest rate (rd)

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2
Q

Ru (return on unlevered equity) / R wacc

A

(E/E+D)Re + (D/E+D)Rd

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3
Q

Re (return on levered equity), also same as cost of capital formula

A

Ru + D/E (Ru-Rd)

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4
Q

Estimate unlevered cost of capital using risk free rate and premium

A

risk free rate + Ru x market risk premium

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Corporate Finance (6 decks)

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