Damodaran on Valuation_ Security Analysis for Investment and Corporate Finance ( PDFDrive )
markets,itcanbeamistakewheninterestratesanddefault spreads are volatile. Asimplewaytoconvertbookvaluedebtintomarketvalue debtist ...
54 Toconvertthebookvalueofdebttomarketvalue,weusethe pretaxcostofdebtforDisneyof5.25%asthediscountrate, $13,100millionasthebookv ...
Year Commitment ($millions) Present Value ($millions) 6–9 258.25 704.93 Debt value of leases 1,752.85 Addingthedebtvalueofoperat ...
thefirmwillprobablyincreaseovertimetowardtheindustry average. Target Debt Ratios and Changing Financing Mix Mature firms sometim ...
ThecostofcapitalforDisneyasacompanyis8.59%,butthe costsofcapitalvaryacrossdivisionswithalowof7.90%for theparksandresortsdivision ...
value of debt and equity in early 2005, as shown in the following table: ManyanalystsinEuropeandLatinAmericaprefertosubtract the ...
wenetcashagainstdebt.Weassumethatbothdebtandcash arerisklessandthatthetaxbenefitfromdebtisexactlyoffset by the tax paid on inter ...
pricing and multifactor models). We also present three different waysin which we canestimate the costofequity: byenteringthepara ...
uncovered in the data and each asset’s exposures (betas) relative to the factors. 3 N.F.Chen,R.R.Roll,andS.A.Ross,“EconomicForce ...
Solving fortheThaiinterestrate yieldsa 10-yearrisk-free rate of 10.12 percent. 9 Ratingsagenciesgenerallyassigndifferentratingsf ...
correlationinstockreturnsovertimeisextensiveandcanbe foundin FamaandFrench (E. F.Famaand K.R.French, “Permanent and Temporary Co ...
20 ThestandarddeviationinC-Bondreturnswascomputed using weekly returns over two years as well. Since these returnsareindollarsan ...
havemovedupordownsignificantlyinthoseperiods).Using thesenontrading-periodreturnsintheregressionwillreduce thecorrelationbetween ...
31 Interestexpenses alwayslower netincome,but thefact that the firm uses debt instead of equity implies that the numberofsharesw ...
37 Thedetailsofthiscalculationwillbeexploredlaterinthis chapter. 38 Foramorecompletediscussionofthisestimationprocess, please lo ...
45 Ifthefirmhasoperating leasesoutstanding, theinterest coverage ratio should be modified. The lease expense should be the curre ...
51 Therearesomewhoarguethatstockpricesaremuchmore volatilethantheunderlyingtruevalue.Evenifthisargument isjustified(andithasnotc ...
54 Preferredstockshouldreallynotbetreatedasdebt.Inthis case,though,theamountofpreferredstockissosmallthat we have included it as ...
CHAPTER 3 Measuring Cash Flows Cashflowsarekeyto discountedcash flowvaluations.To estimate cash flows, we usually begin with a m ...
justtheequityinvestorsinthebusinessandarethusafterall cashflowsassociatedwithdebt(interestpayments,principal payments,newdebtiss ...
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