Quick Quiz

1. What are the two approaches for computing the cost of equity?
Dividend growth model dan Security Market Line (SML) atau Capital Asset Pricing Model
(CAPM).

2. How do you compute the cost of debt and the after-tax cost of debt?
• Pre-tax cost of debt = (total interest payments) / (total outstanding debt)
• Post-tax cost of debt = pre-tax cost of debt * (1 – margin tax rate)

3. How do you compute the capital structure weights required for the WACC?
• WE = market value of equity / market value of the firm
• WD = market value of debt / market value of the firm
Note: Market value of the firm = market value of debt + market value of equity

4. What is the WACC?

Weighted Average Cost of Capital (WACC) adalah perhitungan biaya modal perusahaan
yang setiap kategori modal ditimbang secara proporsional.

5. What happens if we use the WACC for the discount rate for all projects?
Kita dapat menerima proyek-proyek yang justru berisiko tinggi dan malah mengabaikan
proyek-proyek yang justru memiliki risiko yang lebih rendah.

6. What are two methods that can be used to compute the appropriate discount rate
when WACC isn’t appropriate?
Pure play approach dan Subjective approach.