Cuando se proyectan estados financieros hay que tener cuidado de construir un modelo consistente y correcto. Esto no es una tarea fácil. Incluso el experto en modelaje más experimentado puede incurrir en equivocaciones. Esto es especialmente relevante cuando se construye un modelo financiero...

Most popular corporate finance textbooks and practitioners present the Weighted Average Cost of Capital WACC calculation as independent from the Free Cash Flow. It is a common use that practitioners calculate a WACC a priori and use it independently from the firm value (this is, from FCF). In...

In this work we explain the proper use of perpetuities and the value of them. We consider two cases: calculating the value on period zero when the perpetuity starts with a given cash flow in period 1 and when it starts from a cash flow in period zero and it grows in period 1 at a given rate (as...

The purpose of this work is double. On one side, we wish to examine if subsidizing the cost of debt has some influence on the firm value (debt plus equity) or if it is just a transfer from debt holders to shareholders. On the other hand, we wish to show that research in Finance, as in many...

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 se exploraron diversas hipotesis acerca del efecto del endeudamiento sobre algunos indicadores de la firma aplicando analisis de datos de panel: crecimiento real, plazo de proveedores, margenes bruto y operativo. Exploramos si hay evidencia estadistica de la influencia del nivel...

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,...

En este trabajo explicamos el uso apropiado de perpetuidades y el cálculo de su valor. Consideramos dos casos: calcular el valor en el período cero cuando la perpetuidad comienza con un flujo de caja dado en el período 1 y cuando se conoce el flujo de caja en el período cero y crece en el...

Practitioners and academics in valuation include changes in liquid assets (potential dividends) in the cash flows. This widespread and wrong practice is inconsistent with basic finance theory. We present economic, theoretical, and empirical arguments to support the thesis. Economic arguments...

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...