Management and Organizational Studies 3311A/B Lecture Notes - Lecture 6: Full-Time Equivalent, Cash Flow, Net Present Value

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 3311A/B
• Professor: Jun Wang

Document Summary

If you use debt, you have underwriting fees. If you use environmentally projects, the government might lend you money at a lower rate. Imperfections could be in a good or bad way. Financing and valuation: there are three alternatives to valuing a project (or firm) In all three cases, the main principle of valuation of discounting cash flows at an appropriate rate (to risk) still holds: the concept is simple identify cash flows and discount back at relevant discount rate. Comparing approaches: all three approaches attempt the same task valuation in the presence of debt financing, the three approaches are theoretically equivalent and will produce the same npv when using perpetuities. Then to adjust the debt financing, adjust the pv of financing effect directly by adding or subtracting amount: wacc initial investment reduction is the total amount calculate unlevered cash flow but use the.