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Unformatted text preview: First, forecast income statement and net profits Next, forecast total assets on the balance sheet. TA=TL+OE B/S "PLUG" Total Assets Equity= Old equity + profit Total liabilities + OE Forecasting Historical method % of sales method Financial ratios Total Assets =Total Liabilities + OE WACC, CAPM Weighted Average Cost of Capital Where: Re = cost of equity Rd = cost of debt E = market value of the firm's equity D = market value of the firm's debt V = E + D E/V = percentage of financing that is equity D/V = percentage of financing that is debt Tc = corporate tax rate Capital Asset Pricing Model...
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