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Basic Question 2 of 4
In evaluating an acquisition, the buyer should use ______ cost of capital and ______ capital structure in developing a WACC.
B. the buyer's, the buyer's.
C. the seller's, the seller's.
A. the buyer's, the seller's.
B. the buyer's, the buyer's.
C. the seller's, the seller's.
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Learning Outcome Statements
calculate the value of a private company using free cash flow, capitalized cash flow, and/or excess earnings methods;
explain factors that require adjustment when estimating the discount rate for private companies;
compare models used to estimate the required rate of return to private company equity (for example, the CAPM, the expanded CAPM, and the build-up approach);
CFA® 2025 Level II Curriculum, Volume 4, Module 25.