Cost of Capital, Cost of Equity and Value Without Circularity for Constant Growth Perpetuities

Felipe Mejía () and Ignacio Velez-Pareja ()

No 7314, Proyecciones Financieras y Valoración from Master Consultores

Abstract: This paper presents a formulation for the cost of equity, the WACC, and the value of equity and firm for growing perpetuities without circularity, using some previous results. We also derive a relationship between leverage, D%, and growth, given a value of debt at instant zero.

Keywords: Firm Valuation; Cost of Capital; Cost of Equity; Cash Flows; Free Cash Flow; Cash Flow to Equity; Capital Cash Flow; WACC; Perpetuities; Constant Growth; Circularity (search for similar items in EconPapers)
JEL-codes: G12 G31 J33 M21 M40 M41 (search for similar items in EconPapers)
Pages: 13
Date: 2010-08-22
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Persistent link: https://EconPapers.repec.org/RePEc:col:000463:007314

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