Company valuation using discounted cash flows is based on the valuation of the Government bonds: it consists of applying the procedure used to value the Government bonds to the debt and shares of a company. This is easy to understand (sections 1, 2 and 3). But company valuation is complicated by...

Spanish Abstract: La valoración por descuento de flujos se basa en la valoración de los bonos del Estado: consiste en aplicar el procedimiento con el que se valoran los bonos del Estado a la deuda y las acciones de la empresa. Es una aplicación fácil de entender (apartados 1, 2 y 3). Pero se...

Spanish Astract: Conviene no perder de vista algo obvio: esta crisis, como todas, es el resultado de decisiones concretas tomadas por personas concretas. Verdad y responsabilidad son y serán, cada vez más, características competitivas de los países.Este artículo termina formulando la...

In the period 1991-2010, the S&P 500 destroyed value for the shareholders ($4.5 trillion). In 1991-1999 it created value ($5.1 trillion), but in 2000-2010 it destroyed $9.6 trillion. The market value of the S&P 500 was $2.8 trillion in 1991 and $11.4 trillion in 2010.We also calculate the...

Spanish Abstract: El WACC es simplemente la tasa a la que se debe descontar el FCF para obtener el mismo valor de las acciones que proporciona el descuento de los flujos para el accionista.El WACC no es ni un coste ni una rentabilidad exigida, sino un promedio ponderado entre un coste y una...

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...

I review 150 textbooks on corporate finance and valuation published between 1979 and 2009 by authors such as Brealey, Myers, Copeland, Damodaran, Merton, Ross, Bruner, Bodie, Penman, Arzac… and find that their recommendations regarding the equity premium range from 3% to 10%, and that 51 books...

We report 2,510 answers from professors from 65 countries and 934 institutions. 1,791 respondents use betas, but 107 of them do not justify the betas they use.97.3% of the professors that justify the betas use regressions, webs, databases, textbooks or papers (the paper specifies which ones),...

This paper contains the statistics of a survey about the Risk-Free Rate (RF) and the Market Risk Premium (MRP) used in 2019 for 69 countries. We got answers for 84 countries, but we only report the results for 69 countries with more than 8 answers.Due to “Quantitative Easing”, many...

Regulators of many countries try to find the “true” WACC of Electricity, Gas, Water… activities. All their documents have in common a main confusion: they do not differentiate among expected, required, historical, and regulator allowed returns, which are 4 very different concepts. Most of...