In Consistency in Chocolate: A Fresh Look at Copeland's Hershey Foods amp; Co Case we showed the inconsistencies regarding the assumption of constant leverage and the inconsistency in the values for equity calculated with different approaches. In this second part we show the differences in the...

Velez-Pareja and Tham, 2003a, Velez-Pareja and Tham, 2003b and Tham and Velez-Pareja, 2004 showed the matching between discounted cash flow (DCF) methods and value added methods. They departed from the net operating profit less adjusted taxes NOPLAT and net income when using market values to...

Veacute;lez-Pareja and Tham, 2003a, Veacute;lez-Pareja and Tham, 2003b and Tham and Veacute;lez-Pareja, 2004 showed the matching between discounted cash flow (DCF) methods and value added methods. They departed from the net operating profit less adjusted taxes NOPLAT and net income when using...

In the financial appraisal of a project, the cashflow statements are constructed from two points of view: The Total Investment (TI) Point of View and Equity Point of View. One of the most important issues is the estimation of the correct financial discount rates for the two points of view. In...

It is widely accepted that the correct discount rate for the tax shield depends on whether the value of the debt is a fixed amount or is a proportion of the value of the firm. In this pedagogical note, using a simple two period numerical example, I assume a fixed amount of debt and demonstrate...

Unquestionably, before the advent of the personal computer, modeling the impacts of inflation in investment appraisal was an enormous task. Currently, with the widespread availability of personal computers, conducting investment appraisal by constructing financial statements with nominal prices...

Researchers continue to quot;horse racequot; the Residual Income (RI) model and the Cash Flow (CF) model, with no regard for the underlying assumptions. Recently, Lundholm and O'Keefe (2000) asserted that they have identified an important reason for the discrepancy between the results obtained...

For cash flows in perpetuity without growth, analysts typically use the following formula for the return to levered equity Ke.lt;brgt;lt;brgt;Ke = Ku + (Ku shy; Kd)(1 shy; T)D/E (1) lt;brgt;lt;brgt;where Ku is the return to unlevered equity, Kd is the cost of debt, T is the tax rate, D is the...

La versioacute;n espantilde;ola de este artiacute;culo se puede encontrar en lt;a href='http://ssrn.com/abstract=279460'gt;http://ssrn.com/abstract=279460lt;/agt;Most finance textbooks (See Benninga and Sarig, 1997, Brealey, Myers and Marcus, 1996, Copeland, Koller and Murrin, 1994, Damodaran, 1996,...