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The Delphi Method (El Metodo Delphi)
Velez-Pareja, Ignacio - 2006
In this teaching note I explain a method to obtain consensus among the members of a group. This method is the well known Delphi Method. This method is useful to close the gap between the total ignorance regarding a fact or situation and a disciplined guess. I present the origin of the name, that...
Persistent link: https://www.econbiz.de/10012735558
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Cost of capital when dividens are deductible
Velez-Pareja, Ignacio; Franco, Julian Benavides - MASTER CONSULTORES - 2009
involving TS in the calculation of the Weighted Average Cost of Capital, WACC, or the Cost of Equity, Ke. Firms earn the right … neither the cost of debt nor the cost of equity. In this paper we develop the formulations for Ke, the cost of levered equity … Cash Flow and WACC for the CCF; iii) equity value with the Cash Flow to Equity and Ke, the levered cost of equity plus debt …
Persistent link: https://www.econbiz.de/10010762914
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Simple errors or myths in dealing with perpetuities
Velez-Pareja, Ignacio - MASTER CONSULTORES - 2009
Terminal value is critical for valuation purposes because very often it is a large part of what constitutes the value of a firm. In this short note I answer and clarify some typical questions and myths related to the calculation of terminal value. They are related to the use of non growing...
Persistent link: https://www.econbiz.de/10010762926
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Constant leverage and constant cost of capital: a common knowledge half-truth
Velez-Pareja, Ignacio; Ibragimov, Rauf; Tham, Joseph - MASTER CONSULTORES - 2007
oflevered equity and for the Weighted Average Cost of Capital (WACC) applied to the Free Cash Flow (FCF) and Capital Cash Flow …), and as a general expression for Ke and WACC derived by Tham and Velez-Pareja (2002) shows, both the cost of levered equity …
Persistent link: https://www.econbiz.de/10010762929
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The Holy Grail in the Quest for Value (with Alpha Methods and Omega Theories)
Tham, Joseph; Velez-Pareja, Ignacio - MASTER CONSULTORES - 2003
Value (with alpha methods and omega theories) is rho, the required return to unlevered equity. …
Persistent link: https://www.econbiz.de/10010762930
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A new approach to WACC, value of tax savings and value for growing and non growing perpetuities: A clarification
Velez-Pareja, Ignacio - MASTER CONSULTORES - 2007
In this note we correct the findings reported by Vélez-Pareja and Tham (2005). Although perpetuities are somewhat artificial in the sense that in practice they do not exist, they are relevant because no matter how detailed and complex a forecasted financial plan for a firm or project could be,...
Persistent link: https://www.econbiz.de/10010762933
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Modeling Cash Flows with Constant Leverage: A Note
Tham, Joseph; Velez-Pareja, Ignacio - MASTER CONSULTORES - 2005
Abstract: It is widely known that if the leverage is constant over time, then the after-tax Weighted Average Cost of Capital (WACC) is constant over time. In other words, it is inappropriate to use a constant after-tax WACC to discount the free cash flow (FCF) if the leverage changes over time....
Persistent link: https://www.econbiz.de/10010762935
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The zero growth model with expected inflation: further insights. A consistent and inflation neutral formulation for the cost of equity
Velez-Pareja, Ignacio - MASTER CONSULTORES - 2008
inconsistencies. We develop a formulation for Ke, the cost of levered equity that is consistent and is inflation neutral. We identify …
Persistent link: https://www.econbiz.de/10010762936
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An Integrated, Consistent Market-based Framework for Valuing Finite Cash Flows
Tham, Joseph; Velez-Pareja, Ignacio - MASTER CONSULTORES - 2005
from the DCF methods. In particular, they apply a charge for equity (based on the book value of equity) to the net income …
Persistent link: https://www.econbiz.de/10010762938
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Use of Inflation as the Basis to Estimate Nominal Increases in Prices
Velez-Pareja, Ignacio - MASTER CONSULTORES - 2002
When estimating future or pro forma financial statements and free cash flows we need to estimate future prices. In doing this we must estimate nominal increases in prices of many items, for instance selling prices, inputs prices (raw material, labor, overhead, etc.), cost of future debt, and...
Persistent link: https://www.econbiz.de/10010762939