Usualmente los textos de finanzas presentan por lo menos un capítulo sobre análisis financiero, entendido como análisis de razones financieras. Se enseñan muchos cursos en análisis financiero y se gasta una enorme cantidad de tiempo en cómo calcular las razones financieras basados en...

Although we know there exists a simple approach to solve the circularity between value and the discount rate, known as the Adjusted Present Value proposed by Myers, 1974, it seems that practitioners still rely on the traditional Weighted Average Cost of Capital, WACC approach of weighting the...

Since the Modigliani and Miller 1958 seminal paper, there has been a problem posed by the fact that the discount rate to value cash flows depends on the value of thesecash flows. This gives raise to the circularity problem.In this paper we propose an analytical solution to this circularity...

In the latest edition of Principles of Corporate Finance (Brealey, Myers and Allen, 2006) the authors use a finite cash flow example to illustrate the valuation procedure for using the Discounted Cash Flow (DCF) method with the free cash flow (FCF) and the Adjusted Present Value (APV). The two...

En este trabajo mostramos que la evaluacion de proyectos debe hacerse con base en flujos de caja calculados a precios corrientes o nominales. Presentamos un caso donde los resultados obtenidos con el metodo de precios constantes estan sobre estimados y existe por tanto, el riesgo de aceptar...

In theory, different valuation methods, with consistent assumptions, must give identical results. Numerical examples that purport to illustrate the theory should demonstrate the identical results. Unfortunately, in popular textbooks it is all too easy to find numerical examples that are at odds...

Although we know there exists a simple approach to solve the circularity between value and the discount rate, known as the Adjusted Present Value proposed by Myers, 1974, it seems that practitioners still rely on the traditional Weighted Average Cost of Capital, WACC approach of weighting the...

We show that project evaluation should be based on free cash flows at nominal prices. We present a case where the results from the constant price method are biased upwards and there is a risk to accept bad projects. It is a widespread practice to evaluate projects at constant prices. With an...

SUBJECT AREAS: Corporate Finance, Valuation, Capital Budgeting, Investment Policy, Economic Value Added, EVA, Market Value Added, MVA, Net Present Value, NPV, cash flows, free cash flows real free cash flowsThis technical note studies Economic Value Added, EVA. First, a conceptual framework...