What factors should be considered when calculating the WACC for a blockchain-based startup?

1 answers

• Nov 24, 2021 · 3 years ago
  When it comes to calculating the WACC for a blockchain-based startup, there are a few factors that need to be considered. First and foremost, the cost of equity should be taken into account. This includes the risk associated with investing in the startup, which can be higher due to the volatility of the cryptocurrency market. Additionally, the cost of debt, such as interest rates on loans or bonds, should be factored in. The beta coefficient, which measures the startup's sensitivity to market movements, is also important in determining the cost of equity. The unique nature of blockchain technology, with its decentralized and transparent nature, can impact the beta coefficient and thus affect the WACC calculation. Lastly, any specific risks or challenges associated with blockchain-based startups, such as regulatory uncertainties or technological vulnerabilities, should be considered in order to accurately calculate the WACC for a blockchain-based startup.
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