PinkFloyd40 Posted April 3 Report Share Posted April 3 any finance people around?? Quote Link to comment Share on other sites More sharing options...
trancerxn112 Posted April 3 Report Share Posted April 3 sup guy? Quote Link to comment Share on other sites More sharing options...
msoprano Posted April 3 Report Share Posted April 3 Originally posted by PFloyd40 any finance people around?? yea great question:aright: Quote Link to comment Share on other sites More sharing options...
lillizzy Posted April 3 Report Share Posted April 3 no, you fucking loser!!! Quote Link to comment Share on other sites More sharing options...
PinkFloyd40 Posted April 3 Author Report Share Posted April 3 Originally posted by trancerxn112 sup guy? well i'm working on an M&A case, the Immunex-Amgen merger from a few years ago.. in regards to the WACC of each respective firm I need both after tax and pre-tax measures.. in regards to cost of debt its pretty straight forward, but what i'm at odds about is whether to use each firms unlevered beta in calculating cost of equity since the tax benefit of debt is included in the levered beta... using an unlevered beta would certainly constitute pre-tax, but would also exclude the incremental risk associated with the debt burden... Quote Link to comment Share on other sites More sharing options...
£ddie Posted April 3 Report Share Posted April 3 Depends on the question. Unless you need it answered right away, I suggest you go here for finance geeks aplenty: http://www.wilmott.com/310/index.cfm Quote Link to comment Share on other sites More sharing options...
dgmodel Posted April 3 Report Share Posted April 3 Originally posted by PFloyd40 any finance people around?? nope... Quote Link to comment Share on other sites More sharing options...
PinkFloyd40 Posted April 3 Author Report Share Posted April 3 Originally posted by dgmodel nope... and the point of this was.... Quote Link to comment Share on other sites More sharing options...
dgmodel Posted April 3 Report Share Posted April 3 the same as this one...Originally posted by PFloyd40 any finance people around?? Quote Link to comment Share on other sites More sharing options...
PinkFloyd40 Posted April 3 Author Report Share Posted April 3 Originally posted by dgmodel the same as this one... that was.. productive..thanks Quote Link to comment Share on other sites More sharing options...
dgmodel Posted April 3 Report Share Posted April 3 oh man... are you having a bad day??? i was joking around... i was being sarcastic in m y initial post... Quote Link to comment Share on other sites More sharing options...
PinkFloyd40 Posted April 3 Author Report Share Posted April 3 Originally posted by dgmodel oh man... are you having a bad day??? i was joking around... i was being sarcastic in m y initial post... yea actually.. lol this case is a p.i.t.a cuz my prof is a cock..and i have to finish this stupid research report for my internship so some douchebag hedge fund manager can end up bringing it to clients and making a lot of money off me.. all while paying me nothing of course my bad bro Quote Link to comment Share on other sites More sharing options...
roha3000 Posted April 3 Report Share Posted April 3 Damn, it really has been long enough for me to forget about all of this crap. I used to bang this stuff out on a daily basis. Now I sit here and try to remember what it all means. Good lord. I gotta stop partying. Quote Link to comment Share on other sites More sharing options...
dgmodel Posted April 3 Report Share Posted April 3 Originally posted by PFloyd40 yea actually.. lol this case is a p.i.t.a cuz my prof is a cock..and i have to finish this stupid research report for my internship so some douchebag hedge fund manager can end up bringing it to clients and making a lot of money off me.. all while paying me nothing of course my bad bro stop looking shortterm.. think big picture... youll eventually be that douchebag who has college kids doing his work for him... so what you put in now, hopefully by karma someone else will put in for you... do not be penny wise and pound foolish... Quote Link to comment Share on other sites More sharing options...
PinkFloyd40 Posted April 3 Author Report Share Posted April 3 Originally posted by dgmodel stop looking shortterm.. think big picture... youll eventually be that douchebag who has college kids doing his work for him... so what you put in now, hopefully by karma someone else will put in for you... do not be penny wise and pound foolish... yea i'm trying.. its just been rough..got final rounds for houlihan though tomorrow.. so hopefully that has a happy ending.. Quote Link to comment Share on other sites More sharing options...
dgmodel Posted April 3 Report Share Posted April 3 GODspeed my friend... Quote Link to comment Share on other sites More sharing options...
petp Posted April 3 Report Share Posted April 3 im not big on corp fin but.....use a leverd beta. to simplify; the more debt u use, the more risk a firm takes on, thus the higher your cost of equity will be (using CAPM). Quote Link to comment Share on other sites More sharing options...
PinkFloyd40 Posted April 3 Author Report Share Posted April 3 Originally posted by petp im not big on corp fin but.....use a leverd beta. to simplify; the more debt u use, the more risk a firm takes on, thus the higher your cost of equity will be (using CAPM). yea i definetly have to use the levered beta when discounting FCFF b/c its a firm level cash flow and thus uses WACC.. i'm just trying to figure out why he would want pre-tax WACC even as a calcluation period and whether i'd need to use an unlevered beta when calculating it since the tax benefit of debt is considered in the WACC... the only thing i can come up w/ is that he wants to quantify the tax benefit in terms of percentage gain through decreasing the cost of capital...damn prof's are always so vague.. Quote Link to comment Share on other sites More sharing options...
petp Posted April 3 Report Share Posted April 3 i would guess he was trying to show you the original assumptions of the miller and modigliani theorem which does not include taxes or default risk. Quote Link to comment Share on other sites More sharing options...
normaldude Posted April 3 Report Share Posted April 3 Originally posted by PFloyd40 well i'm working on an M&A case, the Immunex-Amgen merger from a few years ago.. in regards to the WACC of each respective firm I need both after tax and pre-tax measures.. in regards to cost of debt its pretty straight forward, but what i'm at odds about is whether to use each firms unlevered beta in calculating cost of equity since the tax benefit of debt is included in the levered beta... using an unlevered beta would certainly constitute pre-tax, but would also exclude the incremental risk associated with the debt burden... Simple answer: levered beta. If you need a pre-tax WACC, just assume 0% tax rate for your WACC calculations.Thus your pretax cost of debt would essentially be the same as the after tax cost of debt (since we're using 0% tax rate).And your pretax cost of equity would be calculated using this levered beta:BL = BU * [ 1 + (1-t)*(D/E) ]and since t would be 0%, BL = BU * [ 1 + (D/E) ][edited for simplicity] Quote Link to comment Share on other sites More sharing options...
bigpoppanils Posted April 3 Report Share Posted April 3 Originally posted by PFloyd40 well i'm working on an M&A case, the Immunex-Amgen merger from a few years ago.. in regards to the WACC of each respective firm I need both after tax and pre-tax measures.. in regards to cost of debt its pretty straight forward, but what i'm at odds about is whether to use each firms unlevered beta in calculating cost of equity since the tax benefit of debt is included in the levered beta... using an unlevered beta would certainly constitute pre-tax, but would also exclude the incremental risk associated with the debt burden... i would lean towards levered in that it takes a more accurate measure of risk into account...can you possibly use the levered beta and adjust it using with Amgen and Immunex's corp tax rates? Quote Link to comment Share on other sites More sharing options...
dgmodel Posted April 3 Report Share Posted April 3 try this site for some possible help:http://pages.stern.nyu.edu/~adamodar/ Quote Link to comment Share on other sites More sharing options...
PinkFloyd40 Posted April 4 Author Report Share Posted April 4 Originally posted by dgmodel try this site for some possible help:http://pages.stern.nyu.edu/~adamodar/ you mean the god of finance's website?i'm quite familiar w/ it.. i've been lucky enough to catch him giving 2 seminars at school too.. too bad he dont' teach any undergrad courses Quote Link to comment Share on other sites More sharing options...
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