The WACC approach to valuation is not as useful as the APV approach in leveraged buyouts because:

Question

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In a leveraged buyout, the capital structure of the firm is changing as a result of the acquisition, which makes the WACC approach less useful. The APV approach is preferred as it separates the value of the operating assets from the value of the tax shield, and each can be discounted separately to reflect their different risk profiles. This makes it a more accurate valuation method for leveraged buyouts.

The WACC Approach to Valuation Is Not as Useful as the APV