Difference Between WACC and APV

WACC和APV之间的区别

债务代写  The difference between WACC and APV is how they handle financing side effects. APV valuation approach assumes that the…

Main difference

The difference between WACC and APV is how they handle financing side effects. APV valuation approach assumes that the firm is unlevered and hence use total equity finance (Sabal, 2007). The method values equity, tax shield, debt finance, and non-operating assets separately. The approach is most suitable when the capital structure is likely to be unstable at the investment horizon to assess interest tax shield quickly.

主要区别 债务代写

译文:WACC和APV之间的区别在于它们如何处理融资副作用。 APV估值方法假设该公司是无杠杆的,因此使用总股本融资(Sabal,2007年)。该方法分别评估权益,税盾,债务融资和非经营资产。当资本结构可能在投资范围内不稳定时,该方法最适合于快速评估利息税的范围。 债务代写

On the other hand, WACC is a discounted rate used in DCF valuation, especially if the capital structure is expected to remain unchanged over time (Sabal, 2007). The discount rate is weighed and used to value the project or firm using each source of capital, including debt, equity, etc. The interest rate shield value for each of the debt is calculated together.

Generally, WACC as a discount rate is simpler to use because valuation involves a single step. However, there are instances where APV is necessary.

译文:另一方面,WACC是DCF估值中使用的折现率,尤其是在预期资本结构随时间推移保持不变的情况下(Sabal,2007)。折现率经过权重,并使用包括债务,权益等在内的各种资本来源对项目或公司进行估值。每项债务的利率屏蔽值是一起计算的。
通常,WACC作为折现率更易于使用,因为估值涉及一个步骤。但是,在某些情况下,必须使用APV。

Application

The COVID-19 pandemic has created an economic shock that has affected both small and large companies. However, the size of the firm matters on the survival of firms. Large companies can withstand the turbulence more than small firms. For instance, the Coca Cola company can incur more debts compared to Reed’s, Inc. The capital structure of Coca Cola companies is likely to be stable for long compared to that is Reed’s that might have an unstable investment horizon.

债务代写
债务代写

The value of the firm determines the level of debt at the time of the pandemic. As such, Coca Cola can incur more debt because its firm value is high compared to Reed’s. WACC is the most preferred method. However, if the debt level is independent of firm value and can be anticipated throughout the horizon, then APV is the preferred valuation method.

应用 债务代写

译文:COVID-19大流行造成了经济冲击,影响了大小型公司。 但是,公司的规模对公司的生存至关重要。 大公司比小公司更能承受动荡。 例如,与Reed’s,Inc.相比,可口可乐公司可能产生更多的债务。与Reed的投资前景可能不稳定的情况相比,可口可乐公司的资本结构可能会长期保持稳定。 债务代写

企业的价值决定了大流行时的债务水平。 这样一来,可口可乐可能会产生更多债务,因为与里德相比,可口可乐的公司价值很高。 WACC是最优选的方法。 但是,如果债务水平与公司价值无关,并且可以在整个展望期进行预期,则APV是首选的估值方法。

Reference

Sabal, J. (2007). WACC or APV? Journal of Business Valuation and Economic Loss Analysis2(2).

 
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