Estimate WACC Using CAPM and Cost of Debt

This video covers the following learning objectives:

• Explain the concept and importance of the Weighted Average Cost of Capital (WACC)

• Break down the WACC formula and its components

• Estimate the Cost of Equity using the Capital Asset Pricing Model (CAPM)

• Identify and source inputs for CAPM: risk-free rate, market return, and beta

• Estimate the after-tax cost of debt using YTM or interest expense methods

• Calculate the market value-based capital structure (equity and debt weights)

• Compute WACC in Excel using all components

• Understand when to use WACC versus cost of equity in valuation models