The persistent uncertainty about mid-century CO2 emissions targets is likely to affect not only the technological choices that energy-producing firms will make in the future but also their current investment decisions. We illustrate this effect on CO2 price and global energy transition within a...

We consider a multinational firm that seeks to maximize its total amount of interest tax shield while following a constant debt ratio policy on a global level. The firm's total interest tax shield can then be considered as a piecewise-linear increasing function that is concave with respect to...

This article uses different standpoints to approach the question of the consistency of project valuation methods. It shows that the NPV of a project can be obtained by discounting adjusted operating cash flows at a different rate from the risk-adjusted discount rate which should normally be...

A firm using a discount rate defined at the corporate scale as a Weighted Average Cost of Capital (WACC) may have to value projects subject to a different tax rate from the one used to calculate its discount rate. Moreover, to determine the economic value of a project, the WACC and Arditti-Levy...

In this article, we show how to value projects financed by subsidized loans using the standard WACC method, with three distinct assumptions concerning the debt ratio targeted by the firm. In fact, the subsidized loan amount used to calculate this debt ratio can be determined according to book...

In a recent paper, Jennergren analyzes four loan subsidy valuation methods suggested in authoritative text books. He shows that the first three can be derived from a unique formula whose value depends on the nonsubsidized loan amount that is assumed to be replaced by the subsidized loan. When...

Richard Miller's reply (2008) to my comment (2008) on his claim (2007) that the standard WACC formula fails to correctly remunerate shareholders and bondholders raises crucial questions on the nature of the project's debt that he considers in his calculations. To clarify this point, I here...

In this journal, Miller (2008) argues that the standard WACC formula fails to correctly remunerate shareholders and bondholders. This is proved by considering a project yielding a zero net present value. In this comment, we prove that this apparent failure of the standard WACC approach simply...

We suggest a new approach to calculating a project's net present value, termed the "displaced equity method". Based on a straightforward formula, it analyzes a project partially financed with debt from the perspective that every year the amount of outstanding debt displaces an equivalent amount...

A multinational firm operating under various tax regimes can minimize the total after-tax cost of its debt by allocating it optimally between its projects. To value a marginal project in this context, we build a multi-period model for the selection of projects, assuming that the firm maintains a...