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Examinando por Autor "Tham , Joseph"

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    Constant leverage and constant cost of capital : A common knowledge half-truth
    (Universidad Icesi, 2008-09-25) Tham , Joseph; Ibragimov, Rauf; Vélez Pareja, Ignacio
    A typical approach for valuing finite cash flows is to assume that lever-age is constant (usually as target leverage) and the cost of equity, Ke and the Weighted Average Cost of Capital, WACC are also assumed to be constant. For cash flows in per-petuity, and with the cost of debt, Kd as the discount rate for the tax shield, it is indeed the case that the Ke and WACC applied to the FCF are constant if the leverage is constant. However this does not hold true for finite cash flows