Futurum paper discussion series - “cost of capital depends on free cash flows and conditions for constant leverage”, and “constant leverage and constant cost of capital”
Futurum paper discussion series - “cost of capital depends on free cash flows and conditions for constant leverage”, and “constant leverage and constant cost of capital”
Discussion paper series - “Cost of capital depends on free cash flows and con...Futurum2
Discussion paper series - “Cost of capital depends on free cash flows and conditions for constant leverage”, and “constant leverage and constant cost of capital”
Discussion paper series npv project = npv equityFuturum2
This document discusses the appropriate discount rates to use when calculating net present value (NPV) for a firm with debt financing. Specifically, it debates whether to use "before-tax" and "after-tax" WACC. The discussants agree that using a constant debt ratio to calculate WACC can be incorrect if the predetermined debt schedule has a changing debt ratio over time. They determine that the NPV of free cash flows, capital cash flows, and equity cash flows should be equal if the debt value is equal to book value.
This document provides an overview and presentation by Another Outstanding Solution (AOS) on helping employees retire with certainty. It summarizes AOS's services including actuarially calculating retirement targets for employees and guaranteeing retirement outcomes. It outlines key benefits like inspiring employee loyalty and lowering costs. It also describes AOS's experience and three packaged service levels from basic brokerage to a more advanced personalized financial planning approach. The presentation concludes by asking the audience if AOS is the right solution provider and outlines next steps to review current arrangements and potentially implement an AOS solution.
Schoolsprogrammeschools 140517073301-phpapp02Culture Centre
Since its inception, the Sheikh Mohammed Centre for Cultural Understanding has been providing educational programmes for local schools, universities and institutions from the UAE as well as abroad. In 2013 more than 20,000 students attended our educational programmes.
With our variety of packages and flexible programmes, we can enhance a student's knowledge of the local culture, traditions and religion of the Emirates in a fun and engaging learning environment. Our centre located in the Al Fahidi Historic District is the perfect backdrop for students to explore with our experienced programme guides through the old trading village.
This document summarizes several books the author has worked on related to traditional Portuguese cuisine and agriculture. It describes 5 books in total, providing details on the topic and the author's role in each. For the first four books, the author's responsibilities included research, interviewing subjects, writing text, organizing information, maintaining related websites, and working closely with designers and photographers. The last book involved solely writing the text. Overall, the document outlines the author's experience in authoring and contributing to books celebrating Portuguese regional food traditions and breeds.
Dr. Shweta G. Daftary is one of the best dentists in Dallas. Dr. Daftary provides the finest quality dental care available today. Although she focuses on Cosmetic and Restorative Dentistry, she also offers an exceptional, full service dental practice. For more information please visit http://prestonwooddental.com/smile-solutions/cosmetic-dentistry/
Discussion paper series - “Cost of capital depends on free cash flows and con...Futurum2
Discussion paper series - “Cost of capital depends on free cash flows and conditions for constant leverage”, and “constant leverage and constant cost of capital”
Discussion paper series npv project = npv equityFuturum2
This document discusses the appropriate discount rates to use when calculating net present value (NPV) for a firm with debt financing. Specifically, it debates whether to use "before-tax" and "after-tax" WACC. The discussants agree that using a constant debt ratio to calculate WACC can be incorrect if the predetermined debt schedule has a changing debt ratio over time. They determine that the NPV of free cash flows, capital cash flows, and equity cash flows should be equal if the debt value is equal to book value.
This document provides an overview and presentation by Another Outstanding Solution (AOS) on helping employees retire with certainty. It summarizes AOS's services including actuarially calculating retirement targets for employees and guaranteeing retirement outcomes. It outlines key benefits like inspiring employee loyalty and lowering costs. It also describes AOS's experience and three packaged service levels from basic brokerage to a more advanced personalized financial planning approach. The presentation concludes by asking the audience if AOS is the right solution provider and outlines next steps to review current arrangements and potentially implement an AOS solution.
Schoolsprogrammeschools 140517073301-phpapp02Culture Centre
Since its inception, the Sheikh Mohammed Centre for Cultural Understanding has been providing educational programmes for local schools, universities and institutions from the UAE as well as abroad. In 2013 more than 20,000 students attended our educational programmes.
With our variety of packages and flexible programmes, we can enhance a student's knowledge of the local culture, traditions and religion of the Emirates in a fun and engaging learning environment. Our centre located in the Al Fahidi Historic District is the perfect backdrop for students to explore with our experienced programme guides through the old trading village.
This document summarizes several books the author has worked on related to traditional Portuguese cuisine and agriculture. It describes 5 books in total, providing details on the topic and the author's role in each. For the first four books, the author's responsibilities included research, interviewing subjects, writing text, organizing information, maintaining related websites, and working closely with designers and photographers. The last book involved solely writing the text. Overall, the document outlines the author's experience in authoring and contributing to books celebrating Portuguese regional food traditions and breeds.
Dr. Shweta G. Daftary is one of the best dentists in Dallas. Dr. Daftary provides the finest quality dental care available today. Although she focuses on Cosmetic and Restorative Dentistry, she also offers an exceptional, full service dental practice. For more information please visit http://prestonwooddental.com/smile-solutions/cosmetic-dentistry/
This chapter discusses pricing strategies and objectives. It aims to indicate the importance and complexity of pricing decisions, define what a price is, and identify internal and external factors that influence pricing. The chapter introduces the meaning and multidimensional nature of price, including monetary and non-monetary costs. It emphasizes the importance of price as a marketing instrument. The chapter discusses strategic pricing and delineating an acceptable price range based on structural factors, with the goal of assisting managers in selecting pricing options.
Loeb's Crunch is a consumer goods company introducing a unique condiment product to capitalize on growing demand in the seasoning/sauce industry. The company's onion crunch topping is all-natural, low calorie, and offers a crunchy texture unlike competitors. Loeb's Crunch has established a national retail footprint in over 8,000 stores and 2,000 foodservice locations. The company plans to expand distribution, launch new flavors, and increase household penetration to become a global brand leader. Management has industry experience and the company has received celebrity endorsements and national press coverage. Initial founder investment was over $1.3 million with additional funding of $4 million from family offices and investors.
El documento habla sobre la tilde diacrítica en monosílabos, palabras de una sola sílaba que generalmente no llevan tilde pero algunas sí para diferenciar su significado de otras palabras escritas igual. Explica que la tilde diacrítica se usa en monosílabos para distinguir entre palabras con distintos significados como "te" (pronombre) y "té" (bebida).
A discussion over the book- principal of cash flow valuationFuturum2
This document summarizes an online discussion between Karnen and Ignacio Velez-Pareja (IVP) about IVP's book "Principles of Cash Flow Valuation". Karnen asks questions about chapters he has read so far. IVP provides clarification and additional insights. They discuss the appropriate discount rates to use for perpetuities versus finite cash flows. IVP suggests using an unlevered cost of equity (Ku) and cash flow to equity approach to handle different scenarios in a consistent manner. Karnen remains uncertain about accurately estimating changing discount rates over time. IVP emphasizes the importance of consistency even if the "correct" approach is unknown.
This document discusses issues related to using the Capital Asset Pricing Model (CAPM) over multiple periods. Specifically, it addresses how to adjust beta values for future periods when unlevering and levering betas. It also discusses the importance of having a consistent formula for the cost of equity across different valuation methods when making assumptions about leverage ratios over time. While industry leverage ratios tend to be stable, assuming a constant leverage for future periods poses challenges. The discussion considers different approaches for defining leverage ratios over time in a way that ensures consistency across valuation methods.
Discussion paper series - distributable cash flows in the corporate valuationFuturum2
This discussion examines different approaches to calculating cash flows for valuation purposes. Ignacio argues that cash flows should only include actual distributions to debt and equity holders as reflected in the financial statements, not assumed distributions of excess cash. Karnen initially disagrees, citing different definitions used in textbooks, but comes to understand Ignacio's point that any plans for excess cash should be explicitly stated in the financial statements to avoid inaccuracies. They discuss how treating excess cash differently could misleadingly affect key ratios like leverage used by lenders.
Paper discussion series - discussion on roicFuturum2
This document discusses the differences between ROCE (return on capital employed) and ROIC (return on invested capital). ROCE uses book values from the balance sheet in the calculation, while ROIC uses market values. Comparing ROCE to WACC (weighted average cost of capital), which is a market-derived rate, does not provide an apples-to-apples comparison. Using ROIC instead allows for a proper comparison by putting both figures on the same valuation basis using market values rather than book values. There is no consensus on a single definition of ROIC or ROCE as various sources provide different formulations, but the key point is the numerator should have a logical relationship to the denominator.
Discussions paper series interest calculationFuturum2
The document discusses different methods for calculating periodic interest rates from an annual interest rate. Specifically:
1. One method is (1+annual rate)^(1/periods per year) - 1, which gives a quarterly rate of 1.94% from an 8% annual rate.
2. Another consultant proposed 1 - (1/(1+annual rate)^(1/periods per year)), which gives 1.91%, but the validity of this method is unclear.
3. Paying interest periodically versus as a lump sum at the end of the year would have different costs depending on the interest rate that could be earned elsewhere. The effective annual rate assumes the same rate applies to all, which may
Discussion paper series - wacc using market value or estimated valueFuturum2
This document discusses the appropriate value - market value or estimated value - to use for the proportion of debt-to-value in calculating the weighted average cost of capital (WACC). For listed companies, most agree that the current market value should be used. However, for non-listed companies, the estimated market value based on discounted cash flow analysis is more appropriate since there is no actual market value. The document also notes that WACC and corporate value are intertwined, as WACC depends on the estimated future cash flows, challenging the approach used in some finance texts of defining WACC separately from cash flows.
Use average internal rate of return (airr), don't use internal rate of return...Futurum2
This document summarizes communications between Prof. Carlo Alberto Magni and an individual asking about the Average Internal Rate of Return (AIRR) methodology. Prof. Magni explains that AIRR overcomes flaws in the traditional Internal Rate of Return (IRR) approach by taking a weighted average of internal rates of return using the cost of capital as weights, rather than assuming reinvestment at the IRR. He provides references for papers elaborating on the shortcomings of IRR and advantages of AIRR. The discussion includes examples of calculating interim investment values and rates of return used in AIRR. While maintaining the IRR acronym, Prof. Magni acknowledges AIRR is a misnomer as the
This document discusses the difference between Ito calculus and Taylor expansions in the context of calculating portfolio profit and loss (PL).
While Taylor expansions deal with regular calculus and require differentiability, Ito's lemma looks similar to a Taylor expansion but is an exact equation, not an approximation. Ito's lemma describes how the chain rule works in stochastic calculus.
The document uses the example of calculating option PL to illustrate the difference. A Taylor expansion can be used to calculate the first-order PL terms from changes in the stock price, volatility, and time. However, the full PL calculation involves additional non-market factors like funding costs, credit valuation adjustments, and cross-currency effects that
Discussion paper series iteration or circularity in wacc calculationFuturum2
This email exchange discusses issues with circularity that can arise when calculating the weighted average cost of capital (WACC). Specifically, the weights used to calculate the WACC may differ from the actual debt-to-equity ratio of the company being valued. The discussion focuses on two approaches to address this issue. The first is to set target debt levels in projections so the debt-to-value ratio remains constant. The second is to iterate the calculations, recalculating the WACC based on estimated values until the weights converge. The exchange also notes one should not expect projected debt ratios to exactly match target weights, but they should remain reasonably close.
The document discusses the time value of money and how to value cash flows that occur at different points in time. It introduces key concepts like compound interest, discounting, perpetuities, annuities, and net present value. It provides formulas for calculating the present and future value of lump sums, perpetuities, annuities, growing perpetuities, and growing annuities. Tools like spreadsheets and calculators can simplify time value of money calculations. The internal rate of return is the interest rate that makes the net present value of a project's cash flows equal to zero.
Futurum stated and effective interest rateFuturum2
This document discusses stated and effective annual interest rates. It begins by explaining how corporate finance textbooks typically cover the calculation of stated and effective annual interest rates. However, it notes that textbooks often fail to provide important additional context and warnings. Specifically, textbooks usually assume interest is paid at the end of periods rather than upfront, and they don't address whether stated and effective rates using different compounding methods are truly equivalent given their different cash flows. The document then provides an expanded explanation of these issues and cautions the reader to think critically before applying formulas without consideration of these important factors.
This document discusses stated and effective annual interest rates. It begins by explaining how corporate finance textbooks typically cover the calculation of stated and effective annual interest rates. However, it notes that textbooks often fail to provide additional important context. Specifically, textbooks do not clarify that interest is usually paid at the end of a period, not the beginning, and do not address whether rates with different compounding methods are truly equivalent. The document then provides an expanded explanation of these issues and cautions readers to think critically about interest rate conversions.
Usse average internal rate of return (airr), don't use internal rate of retur...Futurum2
This is to document the email correspondences with Prof. Peter M. DeMarzo (Stanford University) and Prof. Carlo Alberto Magni with regards to Average Internal Rate of Return in Dec 2015.
Are P/E Ratios a Poor Measure of Value? Valuation LinkedIn DiscussionFuturum2
This group is dedicated to business valuation professionals and includes discussions on various topics related to business valuation. Recent discussions include comments on an article about flaws in using price to earnings ratios to measure value, with members agreeing the accounting earnings used can be unreliable. Other discussions focus on returns on invested capital being an important metric, the difference between stock pricing and business value, and the importance of entity-specific risks to management versus market risks.
This chapter discusses pricing strategies and objectives. It aims to indicate the importance and complexity of pricing decisions, define what a price is, and identify internal and external factors that influence pricing. The chapter introduces the meaning and multidimensional nature of price, including monetary and non-monetary costs. It emphasizes the importance of price as a marketing instrument. The chapter discusses strategic pricing and delineating an acceptable price range based on structural factors, with the goal of assisting managers in selecting pricing options.
Loeb's Crunch is a consumer goods company introducing a unique condiment product to capitalize on growing demand in the seasoning/sauce industry. The company's onion crunch topping is all-natural, low calorie, and offers a crunchy texture unlike competitors. Loeb's Crunch has established a national retail footprint in over 8,000 stores and 2,000 foodservice locations. The company plans to expand distribution, launch new flavors, and increase household penetration to become a global brand leader. Management has industry experience and the company has received celebrity endorsements and national press coverage. Initial founder investment was over $1.3 million with additional funding of $4 million from family offices and investors.
El documento habla sobre la tilde diacrítica en monosílabos, palabras de una sola sílaba que generalmente no llevan tilde pero algunas sí para diferenciar su significado de otras palabras escritas igual. Explica que la tilde diacrítica se usa en monosílabos para distinguir entre palabras con distintos significados como "te" (pronombre) y "té" (bebida).
Similar to Futurum paper discussion series - “cost of capital depends on free cash flows and conditions for constant leverage”, and “constant leverage and constant cost of capital”
A discussion over the book- principal of cash flow valuationFuturum2
This document summarizes an online discussion between Karnen and Ignacio Velez-Pareja (IVP) about IVP's book "Principles of Cash Flow Valuation". Karnen asks questions about chapters he has read so far. IVP provides clarification and additional insights. They discuss the appropriate discount rates to use for perpetuities versus finite cash flows. IVP suggests using an unlevered cost of equity (Ku) and cash flow to equity approach to handle different scenarios in a consistent manner. Karnen remains uncertain about accurately estimating changing discount rates over time. IVP emphasizes the importance of consistency even if the "correct" approach is unknown.
This document discusses issues related to using the Capital Asset Pricing Model (CAPM) over multiple periods. Specifically, it addresses how to adjust beta values for future periods when unlevering and levering betas. It also discusses the importance of having a consistent formula for the cost of equity across different valuation methods when making assumptions about leverage ratios over time. While industry leverage ratios tend to be stable, assuming a constant leverage for future periods poses challenges. The discussion considers different approaches for defining leverage ratios over time in a way that ensures consistency across valuation methods.
Discussion paper series - distributable cash flows in the corporate valuationFuturum2
This discussion examines different approaches to calculating cash flows for valuation purposes. Ignacio argues that cash flows should only include actual distributions to debt and equity holders as reflected in the financial statements, not assumed distributions of excess cash. Karnen initially disagrees, citing different definitions used in textbooks, but comes to understand Ignacio's point that any plans for excess cash should be explicitly stated in the financial statements to avoid inaccuracies. They discuss how treating excess cash differently could misleadingly affect key ratios like leverage used by lenders.
Paper discussion series - discussion on roicFuturum2
This document discusses the differences between ROCE (return on capital employed) and ROIC (return on invested capital). ROCE uses book values from the balance sheet in the calculation, while ROIC uses market values. Comparing ROCE to WACC (weighted average cost of capital), which is a market-derived rate, does not provide an apples-to-apples comparison. Using ROIC instead allows for a proper comparison by putting both figures on the same valuation basis using market values rather than book values. There is no consensus on a single definition of ROIC or ROCE as various sources provide different formulations, but the key point is the numerator should have a logical relationship to the denominator.
Discussions paper series interest calculationFuturum2
The document discusses different methods for calculating periodic interest rates from an annual interest rate. Specifically:
1. One method is (1+annual rate)^(1/periods per year) - 1, which gives a quarterly rate of 1.94% from an 8% annual rate.
2. Another consultant proposed 1 - (1/(1+annual rate)^(1/periods per year)), which gives 1.91%, but the validity of this method is unclear.
3. Paying interest periodically versus as a lump sum at the end of the year would have different costs depending on the interest rate that could be earned elsewhere. The effective annual rate assumes the same rate applies to all, which may
Discussion paper series - wacc using market value or estimated valueFuturum2
This document discusses the appropriate value - market value or estimated value - to use for the proportion of debt-to-value in calculating the weighted average cost of capital (WACC). For listed companies, most agree that the current market value should be used. However, for non-listed companies, the estimated market value based on discounted cash flow analysis is more appropriate since there is no actual market value. The document also notes that WACC and corporate value are intertwined, as WACC depends on the estimated future cash flows, challenging the approach used in some finance texts of defining WACC separately from cash flows.
Use average internal rate of return (airr), don't use internal rate of return...Futurum2
This document summarizes communications between Prof. Carlo Alberto Magni and an individual asking about the Average Internal Rate of Return (AIRR) methodology. Prof. Magni explains that AIRR overcomes flaws in the traditional Internal Rate of Return (IRR) approach by taking a weighted average of internal rates of return using the cost of capital as weights, rather than assuming reinvestment at the IRR. He provides references for papers elaborating on the shortcomings of IRR and advantages of AIRR. The discussion includes examples of calculating interim investment values and rates of return used in AIRR. While maintaining the IRR acronym, Prof. Magni acknowledges AIRR is a misnomer as the
This document discusses the difference between Ito calculus and Taylor expansions in the context of calculating portfolio profit and loss (PL).
While Taylor expansions deal with regular calculus and require differentiability, Ito's lemma looks similar to a Taylor expansion but is an exact equation, not an approximation. Ito's lemma describes how the chain rule works in stochastic calculus.
The document uses the example of calculating option PL to illustrate the difference. A Taylor expansion can be used to calculate the first-order PL terms from changes in the stock price, volatility, and time. However, the full PL calculation involves additional non-market factors like funding costs, credit valuation adjustments, and cross-currency effects that
Discussion paper series iteration or circularity in wacc calculationFuturum2
This email exchange discusses issues with circularity that can arise when calculating the weighted average cost of capital (WACC). Specifically, the weights used to calculate the WACC may differ from the actual debt-to-equity ratio of the company being valued. The discussion focuses on two approaches to address this issue. The first is to set target debt levels in projections so the debt-to-value ratio remains constant. The second is to iterate the calculations, recalculating the WACC based on estimated values until the weights converge. The exchange also notes one should not expect projected debt ratios to exactly match target weights, but they should remain reasonably close.
The document discusses the time value of money and how to value cash flows that occur at different points in time. It introduces key concepts like compound interest, discounting, perpetuities, annuities, and net present value. It provides formulas for calculating the present and future value of lump sums, perpetuities, annuities, growing perpetuities, and growing annuities. Tools like spreadsheets and calculators can simplify time value of money calculations. The internal rate of return is the interest rate that makes the net present value of a project's cash flows equal to zero.
Futurum stated and effective interest rateFuturum2
This document discusses stated and effective annual interest rates. It begins by explaining how corporate finance textbooks typically cover the calculation of stated and effective annual interest rates. However, it notes that textbooks often fail to provide important additional context and warnings. Specifically, textbooks usually assume interest is paid at the end of periods rather than upfront, and they don't address whether stated and effective rates using different compounding methods are truly equivalent given their different cash flows. The document then provides an expanded explanation of these issues and cautions the reader to think critically before applying formulas without consideration of these important factors.
This document discusses stated and effective annual interest rates. It begins by explaining how corporate finance textbooks typically cover the calculation of stated and effective annual interest rates. However, it notes that textbooks often fail to provide additional important context. Specifically, textbooks do not clarify that interest is usually paid at the end of a period, not the beginning, and do not address whether rates with different compounding methods are truly equivalent. The document then provides an expanded explanation of these issues and cautions readers to think critically about interest rate conversions.
Similar to Futurum paper discussion series - “cost of capital depends on free cash flows and conditions for constant leverage”, and “constant leverage and constant cost of capital” (12)
Usse average internal rate of return (airr), don't use internal rate of retur...Futurum2
This is to document the email correspondences with Prof. Peter M. DeMarzo (Stanford University) and Prof. Carlo Alberto Magni with regards to Average Internal Rate of Return in Dec 2015.
Are P/E Ratios a Poor Measure of Value? Valuation LinkedIn DiscussionFuturum2
This group is dedicated to business valuation professionals and includes discussions on various topics related to business valuation. Recent discussions include comments on an article about flaws in using price to earnings ratios to measure value, with members agreeing the accounting earnings used can be unreliable. Other discussions focus on returns on invested capital being an important metric, the difference between stock pricing and business value, and the importance of entity-specific risks to management versus market risks.
A quick comment on pablo fernandez' article capm an absurd model draftFuturum2
This is to document email correspondence with Prof. Peter M. DeMarzo (Stanford University, USA) and Ignacio Velez-Pareja (Columbia) with regards to the article by Pablo Fernandez posted at SSRN.com under the title "CAPM: An Absurd Model"
Summing up about growing and non growing perpetuities wacc levered and tax sa...Futurum2
In this note we reconsider in detail the proper discount rate for cash flows in perpetuity, the present value of tax savings and the calculation of terminal value. The note clarifies the use of real discount rates and concludes with a formulation that is inflation-neutral for a given assumption on the discount rate for the tax savings. We find that the only discount rate for tax savings that makes the value of the perpetuity inflation-neutral is Kd, the cost of debt. We also reconsider the intuitive approach to calculate the cost of capital for perpetuities from the nominal rates that compose that cost of capital, and then
converting it into real cost of capital using Fisher relationship.
Ignacio Velez-Pareja : From the Slide Rule to the Black BerryFuturum2
1. The document discusses using financial modeling as a tool for business valuation and value management, rather than just for transactions like selling or buying a company.
2. It proposes developing a comprehensive financial model with traditional statements plus a cash budget to estimate how decisions impact future cash flows and value. This allows management to proactively shape the future rather than just reacting to the past.
3. The model incorporates factors like inflation, growth, and policies to evaluate risks and test scenarios. It is based on double-entry accounting to help ensure accuracy and identify errors.
Surplus revaluasi atau penilaian kembali aset tetapFuturum2
Dokumen tersebut membahas tentang apakah akun "Surplus Revaluasi Aset Tetap" dapat direklasifikasi menjadi akun "Modal Saham". PSAK dan IAS mengijinkan reklasifikasi surplus revaluasi ke saldo laba, namun tidak mengijinkan reklasifikasi ke akun lain seperti modal saham. Aturan pajak mengizinkan kapitalisasi surplus revaluasi menjadi modal saham, namun hal ini bertentangan dengan standar akuntansi.
Perpetuity and growing pepetuity formula derivationFuturum2
This 7-page document from www.futurumcorfinan.com discusses the derivation of formulas for calculating the present value of perpetuities and growing perpetuities. It is written in Indonesian and contains multiple pages of equations and analysis. The document prohibits copying or distributing its contents without written permission from the author. It directs readers with questions or comments to the website and notes that all rights are reserved by FUTURUM.
15-minute lesson- watch out the formula that you use for roa (return on assets)Futurum2
The document is a 15-minute lesson on the formula used to calculate return on assets (ROA). It cautions readers to watch out for the formula they use for ROA calculations. The 8-page document is from the website www.futurumcorfinan.com and contains a disclaimer stating that the opinions expressed are those of FUTURUM as of the date written and are subject to change. It also states that the document may not be reproduced without written permission from the authors and FUTURUM.
Akuisisi aset atau akuisisi bisnis asc topic 805Futurum2
Transaksi akuisisi aset atau bisnis memiliki konsekuensi akuntansi dan pajak yang berbeda. FASB mempersempit definisi bisnis dalam ASU Topic 805 dengan menekankan bahwa suatu himpunan harus memiliki input dan proses substantif untuk menghasilkan output. Revisi ini dimaksudkan untuk memberi panduan lebih jelas dalam menentukan apakah suatu transaksi merupakan akuisisi aset atau bisnis.
Apakah perhitungan biaya kapital rata rata tertimbang (wacc) dalam capital bu...Futurum2
Dokumen tersebut membahas tentang perhitungan Weighted Average Cost of Capital (WACC) yang tepat dalam capital budgeting perusahaan. WACC merupakan rata-rata tertimbang dari biaya komponen modal dan pinjaman perusahaan, namun perhitungannya perlu mempertimbangkan dampak perubahan rasio leverage terhadap biaya modal dan pinjaman.
15-minute lesson overview to understand npvFuturum2
The document is a 10-page article from www.futurumcorfinan.com on net present value (NPV). It includes disclaimers prohibiting copying or distributing the content without permission from the author. The article provides an overview of NPV and notes that any questions or comments about the content can be posted on the website. It concludes with copyright and disclaimer information for FUTURUM.
South Dakota State University degree offer diploma Transcriptynfqplhm
办理美国SDSU毕业证书制作南达科他州立大学假文凭定制Q微168899991做SDSU留信网教留服认证海牙认证改SDSU成绩单GPA做SDSU假学位证假文凭高仿毕业证GRE代考如何申请南达科他州立大学South Dakota State University degree offer diploma Transcript
"Does Foreign Direct Investment Negatively Affect Preservation of Culture in the Global South? Case Studies in Thailand and Cambodia."
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
My study abroad in Bali, Indonesia, inspired this research topic as I noticed how globalization is changing the culture of its people. I learned their language and way of life which helped me understand the beauty and importance of cultural preservation. I believe we could all benefit from learning new perspectives as they could help us ideate solutions to contemporary issues and empathize with others.
Unlock Your Potential with NCVT MIS.pptxcosmo-soil
The NCVT MIS Certificate, issued by the National Council for Vocational Training (NCVT), is a crucial credential for skill development in India. Recognized nationwide, it verifies vocational training across diverse trades, enhancing employment prospects, standardizing training quality, and promoting self-employment. This certification is integral to India's growing labor force, fostering skill development and economic growth.
New Visa Rules for Tourists and Students in Thailand | Amit Kakkar Easy VisaAmit Kakkar
Discover essential details about Thailand's recent visa policy changes, tailored for tourists and students. Amit Kakkar Easy Visa provides a comprehensive overview of new requirements, application processes, and tips to ensure a smooth transition for all travelers.
Economic Risk Factor Update: June 2024 [SlideShare]Commonwealth
May’s reports showed signs of continued economic growth, said Sam Millette, director, fixed income, in his latest Economic Risk Factor Update.
For more market updates, subscribe to The Independent Market Observer at https://blog.commonwealth.com/independent-market-observer.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
Enhancing Asset Quality: Strategies for Financial Institutionsshruti1menon2
Ensuring robust asset quality is not just a mere aspect but a critical cornerstone for the stability and success of financial institutions worldwide. It serves as the bedrock upon which profitability is built and investor confidence is sustained. Therefore, in this presentation, we delve into a comprehensive exploration of strategies that can aid financial institutions in achieving and maintaining superior asset quality.
Vicinity Jobs’ data includes more than three million 2023 OJPs and thousands of skills. Most skills appear in less than 0.02% of job postings, so most postings rely on a small subset of commonly used terms, like teamwork.
Laura Adkins-Hackett, Economist, LMIC, and Sukriti Trehan, Data Scientist, LMIC, presented their research exploring trends in the skills listed in OJPs to develop a deeper understanding of in-demand skills. This research project uses pointwise mutual information and other methods to extract more information about common skills from the relationships between skills, occupations and regions.
University of North Carolina at Charlotte degree offer diploma Transcripttscdzuip
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A toxic combination of 15 years of low growth, and four decades of high inequality, has left Britain poorer and falling behind its peers. Productivity growth is weak and public investment is low, while wages today are no higher than they were before the financial crisis. Britain needs a new economic strategy to lift itself out of stagnation.
Scotland is in many ways a microcosm of this challenge. It has become a hub for creative industries, is home to several world-class universities and a thriving community of businesses – strengths that need to be harness and leveraged. But it also has high levels of deprivation, with homelessness reaching a record high and nearly half a million people living in very deep poverty last year. Scotland won’t be truly thriving unless it finds ways to ensure that all its inhabitants benefit from growth and investment. This is the central challenge facing policy makers both in Holyrood and Westminster.
What should a new national economic strategy for Scotland include? What would the pursuit of stronger economic growth mean for local, national and UK-wide policy makers? How will economic change affect the jobs we do, the places we live and the businesses we work for? And what are the prospects for cities like Glasgow, and nations like Scotland, in rising to these challenges?
Futurum paper discussion series - “cost of capital depends on free cash flows and conditions for constant leverage”, and “constant leverage and constant cost of capital”
1. www.futurumcorfinan.com
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Paper Discussion Series:
“Cost of Capital Depends on Free Cash Flows
and Conditions for Constant Leverage”, and
“Constant Leverage and Constant Cost of
Capital”
An old joke of a former student that met his finance professor?
He said to his teacher, hey you were my teacher 20 years ago and I saw your tests and they
have the same questions you used to apply to us in the quizzes and exams.
How come? Everybody will know the answers!
The professor replied: Yes, they are the same questions. The new thing is that answers change
Sukarnen
DILARANG MENG-COPY, MENYALIN,
ATAU MENDISTRIBUSIKAN
SEBAGIAN ATAU SELURUH TULISAN
INI TANPA PERSETUJUAN TERTULIS
DARI PENULIS
Untuk pertanyaan atau komentar bisa
diposting melalui website
www.futurumcorfinan.com
2. www.futurumcorfinan.com
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Karnen = Sukarnen (a student)
IVP = Ignacio Velez-Pareja (valuation advisory, authors of many papers and books)
Karnen:
Hi Ignacio,
I copied from Damodaran's holy sermon:
While the temptation is to go with book values for debt and equity, you should steer away from
them. There are three alternatives you can employ.
Use the industry average market debt ratio, obtained by looking at publicly traded
companies in the sector, to estimate the cost of equity and capital.
Use an estimated market value of equity, based upon applying a multiple (say a PE
ratio) to your private company’s earnings to arrive at a debt to equity ratio.
Use your DCF estimates of equity and debt value to compute your cost of capital. Since
you will need the cost of capital to arrive at these estimates, this will create circularity in
your valuation. If you are willing to use the iteration function in Excel, you should be still
able to work with the circularity.
By the way, I am reading now your paper : Cost of capital depends on FCF and conditions for
constant leverage.
I have finished up reading your paper: Returns to Basics Cost of Capital Depends on Free Cash
Flow.
Interesting! Changing FCF somehow has an impact to WACC...circularity due to D/V factor in
the WACC calculation.
IVP: Yes! They are not independent!
Karnen:
However......
If you sit as an investor...in the market...if people asked you how much rate of return you expect
to get from a stock investment. Mostly people will see on the going rate and historical returns (if
you are lucky to have that)...and you said this is your "expected", "required", "minimum", rate of
3. www.futurumcorfinan.com
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return. I don't think not many people will say, "well,....it depends of the cash flow projection".
Probably because it is not easy to have it and the "market price" somehow you believe that it
has incorporated the free cash flow projection and WACC as expected by the market in the
aggregate. So ...the going market rate is what we use in the valuation analysis. There might be
a disconnection between the market rate and the rate from the PV of projected cash flows. Then
what does that difference mean?
IVP:
Yes, you are right! However, what people have in their mind is what they expect to earn in an
investment and usually they don't differentiate if their investment "has debt". I would say what
they expected is Ku without knowing it. This said, I take that expectation as Ku and use CCF
and that is it. The only adjustment needed is for inflation if I don' expect changing inflation.
Karnen:
I guess, Ignacio, this is all about the valuation purpose, to identify those stocks "undervalued" or
"overvalued"....
No, it is about valuation of firma and projects.IVP:
Karnen:
It means it will be ok to have a market rate to discount the projected free cash flow...
See above about CCF!IVP:
Karnen:
What do you think?
Note : Though I understand your paper, but still I am confused, as so many people in the market
don't use such interconnections between FCFs and WACC...They call it "benchmark WACC" so
it is not necessary to be "internal" as your paper indicated so, but as "benchmark" means
"external comparison"....
See above again . it is Ku!IVP:
4. www.futurumcorfinan.com
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Karnen:
The way I see in your paper, is like INTERNAL rate of return calculation. We could easily get
IRR without even knowing market rate, and just change the cash flows ups and downs to get
the IRR that we want to see.
You can do that, but I don't like it.IVP:
Could you please give me the link of Damodaran's holy sermon? :-)
Listen, Damodaran lists those three options as equivalent and they are not. The first two imply
to use constant D/E and Ke. And this is what he uses in his books! The problem is the same!
Those D/E are point estimates at t=0. What happens with t>0?
Dear Karnen, your vocation is to be an academician! I never have seen a Finance teacher (Not
to say a consultant) that studies more than you do! Chapeau!
Remember all formulae for Ke? Well, the ONLY one that could stand in a constant D/E setting is
when you Assume Ku as discount rate of TS! Would you smile?
Karnen:
Hi Ignacio,
Thanks.
Will send it tomorrow as I keep Damodaran's papers or presentations in my external HD.
I started reading your paper "Constant Leverage and Constant Cost of Capital"
You started in the abstract by stating that under perpetuity context, constant D/E is a special
case, it is only under kd as the discount rate for TS, that constant D/E will make ke and WACC
will be constant as well. So this is a very special situation. Once it is not, then we don't and we
can't assume D/E constant away.
I am trying to look at the formula in your Principles of Cash Flow book, Table A.2.1 (page 79).
Formula for WACC is similar for either kd or ku as the discount rate for TS. The difference will
be only on the ke, which under kd as the TS discount rate, then we have (1-T).
5. www.futurumcorfinan.com
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IVP:
Be careful. The Ke with the (1- t) is only when you have perpetuities! For finite cash flows you
have term with VTS that depends on TS. Hence, you don't have the beauty of Ke = Ku + (Ku-
Kd)D/E. It is in this case where Ke might be constant given that you design D in order D/E be
constant.
When Ku is the risk of TS the formula for perpetuities is the same as for finite.
In short, what we say in the paper is that when CFs is finite, the only possibility to have constant
D/E is assuming Ku as risk of TS. With perpetuities, it could be either Ku or kd.
I look forward to receiving the holy paper by Damodaran.
Karnen:
Hi Ignacio,
Need to confirm:
Under perpetuity context of the FCF, constant D/E will result in constant ke and WACC. This
prevails either under kd or ku as the discount rate for TS "as long as" we consistently use the
formulas as shown in Table A2.1 and Table A2.2, for ke and WACC.
Yes!IVP:
Karnen:
The above is true because we don't have V(TS) in that formula. The only difference in the
formula, as you said above, is we have (1-T) in the ke formula for kd as TS discount rate. As far
as we use the correct formula, then constant D/E will give us constant ke and WACC.
IVP : Yes!
Karnen:
But...
We cannot say the same thing as above, when we are facing "finite cash flows" situation.
Yes!IVP:
6. www.futurumcorfinan.com
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Karnen:
Constant D/E will give us constant ke and WACC only when ku as the discount rate for TS. Yet,
constant D/E will not give us constant ke and WACC when TS discount rate is kd, because we
have V(TS). This V(TS) happens in the "finite cash flows" and it will change depending upon
whether the company could have EBIT(t)>i(t). In other words, it is not always possible to realize
the TS when EBIT(t) is not enough to cover i(t), then in this case, V(TS) could be zero.
Not need to be zero. Just having VTS yu cannot grant that (Ku-Kd)D/E + VTS/E areIVP:
constant. THE Problem is VTS!
Karnen: Am I following your paper and book correctly?
YES!IVP:
Karnen: One more, once we have V(TS), in addition to whether EBIT(t) > i(t), we need to
specify the discount rate for TS as well.
Well, you have to specify the risk of TS in order to know which formulation you will use. IfIVP:
Ku, then Ke = Ku + (Ku-Kd)D/E, if Kd and finite you will have Ke = Ku + (Ku-Kd)D/E + VTS/E
etc.(writing without checking the exact formula )
Karnen: Though I have not yet tried in Excel and finish reading your paper "Constant leverage
and constant cost of capital", I guess, to be consistent, kd should be used as TS discount rate in
the case we have V(TS) in the formula.
NO! The final recommendation is that in order to get constant Ke and constant WACC youIVP:
need to assume Ku as discount rate for TS. Not Kd!
Karnen: I believe your paper "Constant Leverage and Constant Cost of Capital" will explain it
away for my guessing above.
Karnen:
Hi Ignacio,
I copy from your paper : Constant Leverage and Constant Cost of Capital
Practitioners frequently assume that the risk (and corresponding discount rate, ψ) of the interest
tax shield is the cost of debt, Kd. This is done explicitly when, for example, the APV method is
applied, or implicitly, if popular formula Ke= Ku + (Ku−Kd)×(1−T)×D/E (Ku, the cost of unlevered
equity; T, corporate tax rate; D and E are market values of debt and equity, respectively) is used
7. www.futurumcorfinan.com
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to estimate the cost of equity capital. As Taggart (1991) and Tham and Velez-Pareja (2002,
2004) prove, this formulation is valid only for a fixed (in perpetuity) dollar amount of debt, thus
under constant leverage assumption it could be applied only to perpetual cash flows.
You mentioned above "fixed dollar AMOUNT OF DEBT"...As this is "perpetuity" context, are you
saying about "permanent debt" (meaning that the amount of debt is forever there) or "debt/value
that is forever"?
Yes, I have seen authors that use the formula for perpetuities in finite case! You can seeIVP:
some papers by IVP-JTh, about the inconsistencies in B&M books.
What the paragraph you cite is correct and says the same as I have telling you: Ke= Ku +
(Ku−Kd)×(1−T)×D/E is correct only for perpetuities.
Karnen:
Ignacio, you said:
Well, you have to specify the risk of TS in order to know which formulation you will use. If Ku,
then Ke = Ku + (Ku-Kd)D/E, if Kd and finite you will have Ke = Ku + (Ku-Kd)D/E + VTS/E etc.
(writing without checking the exact formula).
So, for VTS above under kd and finite, [the correct one ke = ku + (ku-kd)D/E - (ku-kd) VTS/E],
we need to use kd as the discount rate to get the value of TS, right? And even doing that, still,
constant leverage assumption (D/E) will not end up in constant ke and WACC...is this you are
saying?
Yes, because VTS. You can grant D/E constant but not VTS/E constant. Am I right?IVP:
Karnen:
Ignacio, when you refer to unlevered equity or beta in Damodaran's website, is the link that you
are talking about?
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/Betas.html
Yes, that is it. However, as the pages say, you can have that in xls format. Also, you canIVP:
find total beta. Another issue is that you can find betas by geographical areas, for instance, US,
Europe, emergent countries, including India and China, these two separated and MANY other
indexes such as multiples, P/E EBITDA, etc.
8. www.futurumcorfinan.com
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Karnen:
ke = ku + (ku-kd) x (1-T) x D/E
I know this is only valid under perpetuity and kd is the TS discount rate.
THAT is for perpetuity. Yes.IVP:
Karnen:
As your Table A2.1 (page 79 of your book) said that, but my confusion...D/E.
D here is "permanent amount of debt", or constant D/E, or in perpetuity context constant D/E will
mean D here permanent Debt amount?
I guess so
Not necessarily. What you have to do it to keep constant D/E and that doesn't implyIVP:
constant debt.
Karnen:
Yes, that what I meant.
I am a bit confused since the paragraph said ...
IVP:
You have to use a kind of Solver in order to set that as constant changing Debt.
Karnen:
Valid only for a fixed (in perpetuity) dollar amount of debt.
IVP:
The problem is that E changes, V changes and E = V-D.
Karnen:
Then why you use "fixed (in perpetuity) dollar amount"?
IVP:
In the case of perpetual D and E are constant.
9. www.futurumcorfinan.com
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Karnen:
Then in this case D/E constant, not necessarily "permanent D amount"
IVP:
Yes although you could do what I suggest above, but perpetuities you assume D/E constant.
See the formulation for WACC = Ku - KdTD% (D% is constant and equal to D/V).
Karnen:
Yes, that's what I am thinking of.
IVP:
Then we agree?
Karnen:
I guess the sentence over there in the paper is a bit confusing..since it is mentioned about the
"amount".
IVP:
Probably it is and you are right.
Karnen:
In my head...in the perpetuity, we could assume (a) permanent debt - this is what M&M used, or
(b) constant D/E meaning that the company keeps adjusting its leverage to maintain a constant
D/E.
I guess, the paper should refer to constant D/E instead.
But in perpetuity at the end of the day is the same.IVP:
May 2015
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