This teaching note shows the relationship between levered and unlevered betas and the general formulation for the cost of equity. It also shows, step by step, the procedure to estimate betas from data found in the stock market.It shows well known procedures for estimating betas: correlation...

We present the derivation of cost of capital under the assumption of risky tax shields discounted with the cost of levered equity. We show that the formulation is consistent and is derived from basic financial principles. This formulation is valid for finite cash flows and non growing...

This paper presents a formal derivation of general expressions for Ke and WACC in perpetuities with constant growth, which do not make any assumption on what the proper discount rate is to be applied to the firm's tax shield, and are complemented with numerical examples of its application....

Este trabajo muestra la relación entre las betas apalancadas y sin deuda y la formulación general para el costo del capital. También muestra, paso a paso, el procedimiento para calcular las betas a partir de los datos que se encuentran en el mercado de valores. Se muestran procedimientos...

Llano-Ferro (2009) proposes a solution to avoid 'significant errors' when the Weighted Average Cost of Capital (WACC) obtained by the standard formula leads to significant errors in Net Present Value of the Firm calculations; particularly in those that apply to perpetual cash flow series. In...

Esto es un material de apoyo en PowerPoint para 'http://ssrn.com/abstract=2344169' http://ssrn.com/abstract=2344169 Costo De Capital Y Flujos De Caja Para PYMEs (Cost of Capital and Cash Flows for SMEs).Las empresas no transadas en bolsa, la mayoría de ellas, PYMEs, (Pequeñas y Medianas...

The Spanish version of this paper can be found at http://ssrn.com/abstract=1997065This chapter is devoted to the definition and application of the “cost of capital” concept to the valuation of cash flows from different points of view. We present an approach to estimate the cost of debt and...

La versión española de este artículo se puede encontrar en: 'http://ssrn.com/abstract=2685207' http://ssrn.com/abstract=2685207.We discuss the relevance of personal taxes on Tax Shields. Interest and taxes are the basis for defining an optimal capital structure. When personal taxes are...

The Spanish version of this paper can be found http://ssrn.com/abstract=1899685This paper estimates the value of tax shields, using the discounted cash flow method for 23 major non financial firms listed in the Bolsa de Valores de Colombia (Colombian Stock Exchange) between 2001 and 2010. Our...

The value of debt tax shields in foundational corporate valuation models by Nobel Laureates Modigliani and Miller (MM) continues to be a controversial issue that is central to our understanding of corporate finance. This paper argues that a fundamental valuation problem exists in the MM tax...