Note: This is especially important when buying a business as business valuation calculations need to be performed specifically based on the required return of equity contributors to determine whether paying these returns would be feasible. For sellers of businesses, using a scenario with 100% debt finance and using the cost of debt as a starting point removes some of the subjectiveness of business valuation calculations and usually results in a higher business valuation being calculated.

CopyFinancial > Note: This is especially important when buying a business as business valuation calculations need to be performed specifically based on the required return of equity contributors to determine whether paying these returns would be feasible. For sellers of businesses, using a scenario with 100% debt finance and using the cost of debt as a starting point removes some of the subjectiveness of business valuation calculations and usually results in a higher business valuation being calculated.