The interrelationships between cash flows, corresponding discount rates and values follow certain rules, knowing which one can quite easily and correctly find out value of given cash flow using the discounting-by-components framework, or to find the correct formulation of the discount rate for...

There is a lot of confusion among practitioners about valuing firms and investment projects. At the first sight the discounting procedure is a simple and routine task, which does not involve much effort. But actually even in simple cases accurate valuation requires attention to plenty of...

The paper provides review of Modigliani-Miller capital structure irrelevance proposition and its development since 1958. The paper suggests some pedagogical insights and introduce risk-shifting interpretations of the MM model. We also discuss shapes of cost of debt and cost of equity functions...

There is an ongoing dispute about the assumption of reinvesting intermediate cash flows at cost of capital in calculation of NPV and at IRR in calculation of implied yield to maturity. The lack of conclusive evidence lends support to confusion around the issue. This paper provides logical and...

The paper presents a generalized algorithm of determining the payback period for either a conventional or a non-conventional cash flow of an investment project. A non-conventional cash flow may have more than one payback periods, if an investor makes additional investments during the operating...

This paper reexamines MM's dividend and capital structure irrelevance theorems, refuting the first and confirming the latter from the inside out framework. The paper cooperates with Garry and Linda DeAngelo's papers on the irrelevance of the MM's dividend irrelevance theorem and refutes...

One of the most intricate issues in the long-term financial statements forecasting concerns the employment of accumulated retained earnings for a profitable firm. Reinvesting retained earnings is a strategic choice of far-reaching consequences. Actually, optimistic forecast may imply exponential...

The paper addresses the problem of appropriate risk premium for a discount rate for cash outflows. It finds that adequate risk premium may be positive or negative for either cash inflows or cash outflows depending on the correlation, proportion and standard deviation of cash flows relative to...