Actuarial Outpost
Go Back   Actuarial Outpost > Exams - Please Limit Discussion to Exam-Related Topics > SoA/CAS Preliminary Exams > VEE > Finance
FlashChat Actuarial Discussion Preliminary Exams CAS/SOA Exams Cyberchat Around the World Suggestions

Contact DW Simpson for a Personalized Salary Survey

Thread Tools Search this Thread Display Modes
Old 03-24-2017, 12:38 AM
Hodgey8806 Hodgey8806 is offline
Join Date: Dec 2012
Posts: 61
Default WACC Question for a hurdle rate

I need to compute a new hurdle rate for my company.
Suppose my company competes with companies A, B, and C respectively with equity betas of .7, .8, .9 (while my company has an equity beta of .9). As well, suppose my company has an A- rating while these companies have an BBB+ bond rating.

Which components would I use for my hurdle rate? My debt to equity ratio is 1 to 4, while the average in the industry is 1 to 6.

Do I need to "unlever" the equity betas before utilizing them?
I was thinking I should take the industry average levered beta and the industry average bond rating in calculating my WACC (along with my debt to equity ratio).

Marginal tax rate is 40%.

Economics Applied Stats Corporate Finance
Reply With Quote

beta, debt, equity, finance, wacc

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

All times are GMT -4. The time now is 01:11 PM.

Powered by vBulletin®
Copyright ©2000 - 2020, Jelsoft Enterprises Ltd.
*PLEASE NOTE: Posts are not checked for accuracy, and do not
represent the views of the Actuarial Outpost or its sponsors.
Page generated in 0.20108 seconds with 11 queries