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MODELS OF CAPITAL COSTS QUANTIFICATION
KLIEŠTIK, Tomáš; VALÁŠKOVÁ, Katarína - In: Journal of Advanced Research in Management IV (2013) 1, pp. 5-19
The present contribution deals with the quantification of capital costs. The contribution is written on a theoretical basis. The costs will be particularly quantified in financing only by equity and only by debt capital and particularly in the so-called mixed financing in which weighted average...
Persistent link: https://www.econbiz.de/10010698872
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The value of tax shields IS equal to the present value of tax shields
Cooper, Ian A.; Nyborg, Kjell G. - Institutt for foretaksøkonomi, Norges Handelshøyskole … - 2005
Fernandez (2004b) argues that the present value effect of the tax saving on debt cannot be calculated as simply the present value of the tax shields associated with interest. This contradicts standard results in the literature. It implies that, even though the capital market is complete,...
Persistent link: https://www.econbiz.de/10005645033
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Tax-adjusted discount rates with investor taxes and risky debt
Cooper, Ian A.; Nyborg, Kjell G. - Institutt for foretaksøkonomi, Norges Handelshøyskole … - 2005
This paper derives tax-adjusted discount rate formulas with a constant proportion leverage policy, investor taxes, and risky debt. The result depends on an assumption about the treatment of tax losses in default. We identify the assumption that justifies the textbook approach of discounting...
Persistent link: https://www.econbiz.de/10005645036
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Consistent valuation of project finance and LBO's using the flows-to-equity method
Cooper, Ian; Nyborg, Kjell G. - 2010
A common method of valuing the equity in highly leveraged transactions is the flows-to-equity method. When applying this method various formulas can be used to calculate the time-varying cost of equity. In this paper we show that some commonly used formulas are inconsistent with the assumptions...
Persistent link: https://www.econbiz.de/10008797682
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Comatose Markets : What if Liquidity is Not the Norm?
Damodaran, Aswath - 2011
Much of financial theory and practice is built on the presumption that markets are liquid. In a liquid market, you …
Persistent link: https://www.econbiz.de/10013132032
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Three Discount Methods for Valuing Projects and the Required Return on Equity
Schauten, Marc - 2011
In this paper we discuss the required return on equity for a simple project with a finite life. To determine a project's cost of equity, it is quite common to use Modigliani and Miller's ‘Proposition II' (1963). However, if the assumptions of MM do not hold, ‘Proposition II' will lead to...
Persistent link: https://www.econbiz.de/10013133845
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Does Q-Theory with Investment Frictions Explain Anomalies in the Cross-Section of Returns?
Li, Dongmei - 2011
Q-theory predicts that investment frictions steepen the relation between expected returns and firm investment. Using … constrained firms. There is no evidence that q-theory with investment frictions explains the investment growth, net stock issues …, abnormal corporate investment, or net operating assets anomalies. Limits-to-arbitrage proxies dominate q-theory with investment …
Persistent link: https://www.econbiz.de/10013133882
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Book-to-Market Equity, Financial Leverage and the Cross-Section of Stock Returns
Obreja, Iulian - 2010
I propose a neoclassical production economy with costly external financing, partial investment irreversibility, and endogenous investment/financing decisions to rationalize and quantify the well-documented interaction between the book-to-market equity effect and the financial leverage effect in...
Persistent link: https://www.econbiz.de/10013137473
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A New 'Risky' World Order : Unstable Risk Premiums: Implications for Practice
Damodaran, Aswath - 2010
Investors have to be offered risk premiums to invest in risky assets. These risk premiums take different forms in different asset markets: equity risk premiums (ERP) in stock markets, default spreads in bond markets and real asset premiums in other asset markets. These premiums have their roots...
Persistent link: https://www.econbiz.de/10013138639