The document starts with 100 questions that students, alumni and other persons (judges, arbitrageurs, clients…) have posed to me over the past years. They were recompiled so as to help the reader remember, clarify and, in some cases, discuss some useful concepts in finance. Most of the...

On April 16, 2012 the Argentine Federal Government decreed the intervention of YPF. Its share price declined 29% the day after. Two weeks later the Argentinean Parliament approved the expropriation of 51% of the YPF shares owned by Repsol. We prepared a month ago the case “Valuation of an...

Interest rates have a considerable bearing on share prices. Any investor's experience shows that, in general, when interest rates fall significantly, share prices rise, and vice-versa. We begin by observing the evolution of interest rates in the last 22 years in the United States. We also look...

This case presents the valuation of the shares of an electric company in an emerging country. It permits the reader to identify errors and recalculate the valuation.ElectraBul was expropriated by the government in April 2010. The government said that ElectraBul shareholders should be paid a fair...

On April 16, 2012 the Argentine Federal Government decreed the intervention of YPF and expropriated of 51% of the YPF shares owned by Repsol. Repsol had a 57.4% stake. A tribunal will determine the compensation Repsol will receive for its YPF shares. You are required to help the tribunal. What...

The WACC is just the rate at which the Free Cash Flows must be discounted to obtain the same result as in the valuation using Equity Cash Flows discounted at the required return to equity (Ke).The WACC is neither a cost nor a required return: it is a weighted average of a cost and a required...

The most used methods for valuing companies by Cash Flow Discounting are equity cash flow, free cash flow, capital cash flow and APV (Adjusted Present Value). Only APV does not require iteration All four methods, if properly applied, always give the same value. This result is logical, as all the...

To value shares there are two usual methods that, if properly applied, provide the same value: 1/ Present value of expected free cash flows (FCF) discounted with the WACC rate and then, subtract the value of debt; and 2/ Present value of expected equity cash flows (ECF) discounted with the Ke...