Cost of Equity and WACC for Perpetuities with Constant Growth

Felipe Mejia () and Ignacio Velez-Pareja ()

No 7316, Proyecciones Financieras y Valoración from Master Consultores

Abstract: This paper shows a formulation for the cost of equity and the WACC for growing perpetuities. Some authors have derived the general expressions for those formulas but not specifically for perpetuities with constant growth. The result obtained is that a previously general formulation for a finite number of periods is also valid for growing perpetuities.

Keywords: Firm Valuation; Cost of Capital; Cost of Equity; Perpetuities; Constant Growth; Cash Flow; Free Cash Flow; WACC (search for similar items in EconPapers)
JEL-codes: G12 G31 J33 M21 M40 M41 (search for similar items in EconPapers)
Pages: 9
Date: 2010-08-22
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Persistent link: https://EconPapers.repec.org/RePEc:col:000463:007316

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