The risk-free rate is the rate at which governments can borrow, since governments in developed markets are relatively unlikely to default given their ability to raise taxes. In the US, the risk-free rate is the 10 year treasury bond. In Canada, it is the prime-rate of the 10 year government bond,...

Use the Capital Asset Pricing Model (CAPM), the formula is below. CAPM FormulaCost of equity= risk free rate + beta x equity risk premium...

The weighted average cost of capital weights out the three sources of capital: common shares, debt, and preferred shares. WACC formula= % Equity x Cost of Equity + % Debt x Cost of Debt x (1- Tax Rate) + % Preferred Shares x Cost of Preferred Shares % Equity = Equity / (Equity + Debt […]...

WACC is a blended weight-average between the cost of equity, the after-tax cost of debt, and the cost of preferred equity. You would use the weighted-average cost of capital (WACC) to discount unlevered free cash flow. UFCFs represent cash flows that are available to ALL stakeholders in the business...

Levered free cash flow = unlevered free cash flow + interest expense x (1 – tax rate) + debt borrowings – debt repayments...

Unlevered means without the effects of debt. Therefore, unlevered free cash flows are cash flows before the effects of debt. They do not include interest or any debt payments or borrowings. Levered means with the effect of debt. Therefore, levered free cash flows are cash flows with the effects of d...

Levered Free Cash Flow = Net Income + Depreciation and Amortization – Capital Expenditures – Change in Net Working Capital + Debt Borrowings – Debt Repayments...

Unlevered Free Cash Flow (UFCF) = EBIT x (1 – Tax Rate) + Depreciation and Amortization – Capital Expenditures – Change in Net Working Capital...