Question

In estimating a wacc, can I use a different wacc for each projection year based on different estimates of the risk free-rate?

Answer 1

Usually, firm's capital structure does not change much by year unless it's a young company. Capital structure is sticky. Also, risk free rate is pretty stable unless you are in a developing country where the default risk is high. I would not recommend a using difference WACC for each year unless you have a good justification to do so. Happy New Year :)