Hello, I am valuating a company that right now have a 50% equity and 50% debt capital structure. After 2 year it will generate enough cash to payoff all of its debt and it will be a 100% equity firm with no needs for extra debt to be issued. How should I relever the beta of the company? With its actual capital structure or its future capital structure?

Question

anonymous · Answer

Capital structure should be the target capital structure (assuming that you are calculating WACC).