Valutico

APRIL 12, 2023

Determining a company’s “Cost of Capital” is vital in corporate finance and valuation, and the Weighted Average Cost of Capital (WACC) provides a specific way of doing so. The required rate of return for equity (Re) is generally calculated using the Capital Asset Pricing Model (CAPM).

Weighted Average Cost of Capital 52

Weighted Average Cost of Capital Discounted Cash Flow Beta Risk-free Rate 52

Appraisal Rights

AUGUST 8, 2017

The Court thus observed that while chancery has broad discretion to make findings of fact, those findings of fact must be grounded in the record and consistent with principles of corporate finance and economics. The Supreme Court Rejected the Cross-Appeal and Refused to Disregard the Comparable Companies Analysis.

Discounted Cash Flow 40

Discounted Cash Flow Comparable Company Analysis Risk-free Rate Going Concern Value 40

Musings on Markets

JANUARY 24, 2024

Note also that during 2022 and 2023, the movements in these government bond rates mimic the US treasuries, rising strongly in 2022 and declining or staying stable in 2023. Corporate Borrowing As riskfree rates fluctuate, they affect the rates at which private businesses can borrow money.

Treasury 52

Treasury Risk Premium Start-ups Risk-free Rate 52

Musings on Markets

AUGUST 15, 2023

In every introductory finance class, you begin with the notion of a risk-free investment, and the rate on that investment becomes the base on which you build, to get to expected returns on risky assets and investments. What is a risk free investment? Why does the risk-free rate matter?

Risk-free Rate 98

Risk-free Rate Risk Premium Treasury Start-ups 98

Musings on Markets

JANUARY 31, 2024

In my last three posts, I looked at the macro (equity risk premiums, default spreads, risk free rates) and micro (company risk measures) that feed into the expected returns we demand on investments, and argued that these expected returns become hurdle rates for businesses, in the form of costs of equity and capital.

Equity 80

Equity Book Value Start-ups Corporate Finance 80

Musings on Markets

JANUARY 8, 2022

The consensus can be wrong : A few months ago, I made the mistake of watching Moneyheist, a show on Netflix, based upon its high audience ratings on Rotten Tomatoes , and as I wasted hours on this abysmal show, I got a reminder that crowds can be wrong, and sometimes woefully so.

Risk Premium 99

Risk Premium Start-ups Market Capitalization Corporate Finance 99

Musings on Markets

JANUARY 5, 2024

In my corporate finance class, I describe all decisions that companies make as falling into one of three buckets – investing decisions, financing decision and dividend decisions. Tax rates 4. Financing Flows 5. Dividend yield & payout 3. Default Spreads 3. Margins & ROC 3. Costs of equity & capital 4.

Dividends 105

Dividends Risk Premium Equity Book Value 105

Musings on Markets

JANUARY 28, 2024

In particular, there are wide variations in how risk is measured, and once measured, across companies and countries, and those variations can lead to differences in expected returns and hurdle rates, central to both corporate finance and investing judgments.

Risk Premium 117

Risk Premium Beta Start-ups Equity 117