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Time lags and the weighted average cost of capital
Omega, 1975Abstract This paper analyses the effect on the weighted average cost of capital of lags between the times of raising debt and equity finance. It shows the results of such lags when associated with differing levels of gearing and differing costs of debt and equity.
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Financial Management, 1977
Assuming that the firm has an optimal debt/equity ratio, most textbooks recommend using the weighted average cost of capital as a cutoff rate for investment decision-making. Arditti [1] demonstrates that the components of the weighted after-tax cost of capital, as recommended by most textbooks, have been incorrectly specified.
Fred D. Arditti, Haim Levy
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Assuming that the firm has an optimal debt/equity ratio, most textbooks recommend using the weighted average cost of capital as a cutoff rate for investment decision-making. Arditti [1] demonstrates that the components of the weighted after-tax cost of capital, as recommended by most textbooks, have been incorrectly specified.
Fred D. Arditti, Haim Levy
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Weighted Average Cost of Capital - Factoring in Changing Leverage
SSRN Electronic Journal, 2008Where the project is financed by debt and equity and the internal rate of return of the project is computed for a period extending beyond the amortization period of the debt, accepting the project based on the conventional method of computing the WACC using first year weights, is incorrect. Besides the fact that such a computation pre-supposes default,
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Managerial Decisions and the Weighted Average Cost of Capital
Journal of Finance Issues, 2008This paper explores the relationship between the weighted average cost of capital (WACC) of a company and its marginal cost of capital. We adopt the classic economic theory of production to shed light into the conditions upon which WACC can be safely treated as the marginal cost of a company.
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A Little More on the Weighted Average Cost of Capital
The Journal of Financial and Quantitative Analysis, 1975In a recent issue of this journal, Linke and Kim [1], hereafter denoted as L-K, have shown that for finite-time horizons in excess of one period and if, over the same period, the firm's ratio of debt to equity is held constant, the firm's overall required rate of return could be expressed as a weighted average cost of capital.
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The Weighted Average Cost of Capital and Shareholder Wealth Maximization
The Journal of Financial and Quantitative Analysis, 1977A set of theorems was derived based on the following set of axioms: (1) financial management seeks to maximize the wealth of existing shareholders; (2) all projects being considered at period 0 are of one period duration and possess the attribute that their adoption or rejection by the firm will not affect the business risk of the firm's asset ...
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Efficient management of working capital and weighted average cost of capital
International Journal of Accounting and Finance, 2020Amarjit Gill +2 more
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Implications of the method of capital cost payment on the weighted average cost of capital.
Health services research, 1986The author develops a theoretical and mathematical model, based on published financial management literature, to describe the cost of capital structure for health care delivery entities. This model is then used to generate the implications of changing the capital cost reimbursement mechanism from a cost basis to a prospective basis.
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