A student is trying to find the market value of a firm's assets and is stuck at the step where they need to calculate the WACC.

The student is perplexed about how to find the debt-to-assets ratio needed in the WACC formula, when the value of assets is output by the valuation model but that same asset number is needed as an input into the valuation model.

Which of the below possible options is the WORST or least reasonable remedy to fix this circularity problem?

Select one:

a. Average similar firms' asset betas and input this into the CAPM required return formula to avoid the circularity problem.

b. Average similar firms' current book asset values.

c. Use MS Excel's Goal Seek or Solver algorithms to make the asset value used in the WACC formula the same as the asset value output by the valuation model.

d. Use multiples valuation based on current data so there's no need to discount any cash flows by the WACC, to avoid the circularity problem.

e. Sum the firm's current equity market value and book debt value assuming that the firm's stock are listed.