However, it raises some important issues and presents some potential solutions. A matrix has been developed for pedagogic reasons, the Tax/WACC matrix, displaying all possible and available combinations of tax treatment. By making your choices, you specify your preferred formula for calculating WACC,...
Solutions Problems1and2canbemoderatedbymoresophisticatedstatisticaltechniques. Problem3canbelessenedbyadjustingforchangesinbusinessandfinancialrisk. Lookataveragebetaestimatesofcomparablefirmsintheindustry. StabilityofBeta Mostanalystsarguethatbetasaregenerallystableforfirmsremaininginthesameindustry. ...