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Firm Valuation : Tax Shields & Discount Rates
Ansay, Thomas - 2017
This paper proposes a new discounted cash flows' valuation setup, and derives a general expression for the tax shields' discount rate. This setup applies to any debt policy and any cash flow pattern. It only requires the equality at any time between the assets side and the liabilities side of...
Persistent link: https://www.econbiz.de/10012976531
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The Weighted Average Cost of Capital Over the Life-Cycle of the Firm : Is the Overinvestment Problem of Mature Firms Intensified by a Higher WACC?
Garcia, Carlos - 2016
Firm lifecycle theory predicts that the Weighted Average Cost of Capital (WACC) will tend to fall over the lifecycle of …
Persistent link: https://www.econbiz.de/10013002901
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Patent Litigation and Cost of Capital
Tan, David - 2015
Involvement in patent litigation creates substantial direct and indirect costs for firms. We present evidence that … pairs of firms involved in patent litigation are more evenly-matched in financial profiles than pairs of firms not involved … in litigation. We take advantage of a novel, hand-collected data set that combines data on observed instances of patent …
Persistent link: https://www.econbiz.de/10013036737
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Information, Investment Adjustment, and the Cost of Capital
Huang, Lixin - 2017
Private information imposes a severe trading disadvantage on uninformed traders while at the same time providing firms with valuable signals for investment adjustment. The two forces have opposite impacts on the cost of capital, and the net effect depends on which force dominates. We show that...
Persistent link: https://www.econbiz.de/10012973367
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Adjustment of the Standard WACC Method to Subsidized Loans : A Clarification
Babusiaux, Denis - 2009
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...
Persistent link: https://www.econbiz.de/10013153283
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Implications of Inconsistency in Adjusting the Cost of Capital for Leverage. A Note
Ibragimov, Rauf - 2019
A common procedure for determining the cost of capital for capital investment decisions involves adjusting an unlevered beta for the risk of financial leverage. This note demonstrates that a widespread practice of levering the beta coefficients using the formula of Hamada implies a possibility...
Persistent link: https://www.econbiz.de/10012896981
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Методические Особенности Расчетов Структуры и Стоимости Капитала в Технологиях Финансового Менеджмента (Methodical Features of Calculations of Structure and Cost of the Capital in...
Minasyan, Vigen Babkenovich - 2015
How it is correct to estimate the capital and its market structure for separate projects and the companies in general? In work the iterative method of an assessment of reasonable structure of the capital offered in [4] is investigated and convergence of this method for very wide range of the...
Persistent link: https://www.econbiz.de/10013027587
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The Choice of Tax Shields’ Discount Rate on Firm Valuation : A Case Study
Lopes, Margarida - 2016
This dissertation suggests that the tax savings, in firm valuation, are discounted at a rate computed through a model presented in the literature review, which is different from the rates usually used for this purpose either by the top text books from, for example, Neves (2002), Ross,...
Persistent link: https://www.econbiz.de/10012985739
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The Cost of Capital – A Back Up for Learners
Senthilnathan, Samithamby - 2021
For investing in profitable ventures, the firms intend to recover the investment made in them. Thus, the determination of the respective cost of capital of a venture can provide a base for making decisions on whether to accept the project profitably. In this context, this paper provides some...
Persistent link: https://www.econbiz.de/10013225062
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Cost of Equity and WACC for Perpetuities with Constant Growth
Mejia-Pelaez, Felipe - 2011
This paper presents a formal derivation of general expressions for Ke and WACC in perpetuities with constant growth, which do not make any assumption on what the proper discount rate is to be applied to the firm's tax shield, and are complemented with numerical examples of its application....
Persistent link: https://www.econbiz.de/10013133176