VALUATION RELATIONSHIPS UNDER GROWTH

Authors

  • Julián Benavides Franco Ingeniero Eléctrico (Universidad de los Andes, 1988). Especializaciones en Finanzas y Administración de la Universidad Icesi; Máster of Management (Tulane University, EE.UU., 2001); Ph.D.(C) in Business (Tulane University, EE.UU.); director del Departamento de Finanzas y profesor de tiempo completo de la Universidad Icesi; consultor de empresas privadas y públicas; miembro del Centro Icesi de Gobierno Organizacional.

Keywords:

Cost of capital, return on equity, tax shield value, levered beta

Abstract

One of the most important topics on valuation is the appropriate relationships between cash flows and rate of returns. I review those relationships under the premise, by Myers (1974), of the cost of debt as the right discount for the tax shield. Different hypotheses have been advanced for the tax shield risk, each one producing different valuation results, especially when growth is present. The consequences of some common mistakes on valuation are explored. One difference between the results I obtain and results by others is the presence of growth in the expressions for the discount rates, which can be used to asses the empirical validity of each of the approaches.

Downloads

Download data is not yet available.

Downloads

Published

2003-09-30

Issue

Section

Research articles

How to Cite

VALUATION RELATIONSHIPS UNDER GROWTH. (2003). Estudios Gerenciales, (88), 49-66. https://www2.icesi.edu.co/revistas/index.php/estudios_gerenciales/article/view/117