Note: The WACC is used as the discount rate in the discounted cash flow calculations and there is an inverse relationship between the WACC and the calculated business value. This means that the higher the WACC, the lower the business valuation and vice versa which should make sense as an increase in the loan interest rate would result in higher loan repayments and therefore a lower value of a business servicing the loan repayments as a result of less cash available for shareholders.

CopyFinancial > Note: The WACC is used as the discount rate in the discounted cash flow calculations and there is an inverse relationship between the WACC and the calculated business value. This means that the higher the WACC, the lower the business valuation and vice versa which should make sense as an increase in the loan interest rate would result in higher loan repayments and therefore a lower value of a business servicing the loan repayments as a result of less cash available for shareholders.