It is a well known problem the interactions between the market value of cash flows and the discount rate (usually the weighted average cost of capital, WACC) to calculate that value. This is mentioned in almost all textbooks in corporate finance. However, the solution adopted by most authors is...

Shareholder interests diverge from management (and employee) option holders' on use of corporate cash for reinvestment, dividends, and buybacks. If options equal 25% of shares, shareholders/option holders in theory quot;contractquot; to split future stock profits 80/20. Dividends, however,...

Debt financing with subsidizes interest rate has a multidimensional impact on the firm. Value of the levered equity, value of the debt and overall firm value will be different of those values with debt financing at market rate. Subsidized interest rate on debt does not create any additional cash...

It is a well known problem the interactions between the market value of cash flows and the discount rate (usually the weighted average cost of capital, WACC) to calculate that value. This is mentioned in almost all textbooks in corporate finance. However, the solution adopted by most authors is...

In the standard Weighted Average Cost of Capital (WACC) applied to the free cash flow (FCF), we assume that the cost of debt is the market, unsubsidized rate. With debt at the market rate and perfect capital markets, debt only creates value in the presence of taxes through the tax shield. In...

The case of Evergreen Solar (ESLR) suggests counterparty risk exposure be added to the litany of misgivings on the economic efficiency, absolute performance, and governance conflicts of ASRs. Evergreen Solar in July 2008 issues a convertible, enters into an offsetting, broker-backed long...

The current study adds consideration of a $1.7 billion accelerated stock repurchase (ASR) by Hewlett-Packard (HP) to a recent analysis of 2006-2007 ASRs by Applied Materials, Cypress Semiconductor, Linear Technology, and Xilinx. The HP addition to company case studies leaves fundamental findings...

A previous study failed to identify economic benefits to explain the 2006-2007 popularity of accelerated stock repurchase programs (ASRs) funded through issuance of convertible debt. The case study of a $600 million transaction by Cypress Semiconductor did find cosmetic advantages in terms of...

Antigravity introduces a transaction so implausibly attractive it would be deemed impossible were it not that U.S. companies already float an inferior equivalent at a rate of nearly $500 billion per year. A Cashless Buyback(tm) is exactly like a cash buyback minus the risk and should be viewed...

An earlier report suggested that counterparty risk exposure be added to the litany of misgivings on the economic efficiency, absolute performance, and governance of accelerated stock repurchase agreements (ASRs). In that study, Evergreen Solar in July 2008 issues a convertible, enters into an...