Economic Profit Valuation Method

CFA Level II Corporate Finance
#1

From what I remember, typically we dont include financing costs when calculating NPV because financing cost is represented in discount rate(WACC).

But when we find NPV using Economic profit we deduct $WACC and then discount it-Isnt this going against the general concept of NPV and double counting financing costs?

#2

Just to clarify we deduct $WACC from NOPAT using this ‘Economic Profit Valuation Method’.

#3

If you’re discount rate is the WACC…the cash flow discounted is cash available to both debt and equity investors.

If NOPLAT is cash available for both debt and equity investors then you are correct in using the wacc!!

#4

my question is why is $WACC deducted from NOPLAT before discounting-doesnt that go against basics of NPV which says to not take financing costs into account?