John please tell me something. This is related to mergers and acquisitions. Once we have used the risk adjusted wacc to discount free cashflow and have gotten the value of the company, we deduct both target company debt and acquiring company debt. Why is that? Why do we deduct both companies' debt? Do we take on the debt of the target company too?
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Risk adjusted Wacc
7y ago#1Yes. Subtracting the debt then gives the value of the equity.
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