scholarly journals Generalization of the Modigliani–Miller Theory for the Case of Variable Profit

Mathematics ◽  
2021 ◽  
Vol 9 (11) ◽  
pp. 1286
Author(s):  
Peter Brusov ◽  
Tatiana Filatova ◽  
Natali Orekhova ◽  
Veniamin Kulik ◽  
She-I Chang ◽  
...  
Keyword(s):  
Corporate Finance ◽  
Tilt Angle ◽  
Dividend Policy ◽  
Cost Of Capital ◽  
Weighted Average ◽  
Discount Rates ◽  
Business Valuation ◽  
The World ◽  
Equity Cost ◽  
First Time

For the first time we have generalized the world-famous theory by Nobel Prize winners Modigliani and Miller for the case of variable profit, which significantly extends the application of the theory in practice, specifically in business valuation, ratings, corporate finance, etc. We demonstrate that all the theorems, statements and formulae of Modigliani and Miller are changed significantly. We combine theoretical and numerical (by MS Excel) considerations. The following results are obtained: (1) Discount rate for leverage company changes from the weighted average cost of capital, WACC, to WACC–g (where g is growing rate), for a financially independent company from k0 to k0–g. This means that WACC and k0 are no longer the discount rates as it takes place in case of classical Modigliani–Miller theory with constant profit. WACC grows with g, while real discount rates WACC–g and k0–g decrease with g. This leads to an increase of company capitalization with g. (2) The tilt angle of the equity cost ke(L) grows with g. This should change the dividend policy of the company, because the economically justified value of dividends is equal to equity cost. (3) A qualitatively new effect in corporate finance has been discovered: at rate g < g* the slope of the curve ke(L) turns out to be negative, which could significantly alter the principles of the company’s dividend policy.

scholarly journals Decision Making for Project Appraisal in Uncertain Environments: A Fuzzy-Possibilistic Approach of the Expanded NPV Method

Symmetry ◽  
2020 ◽  
Vol 13 (1) ◽  
pp. 27
Author(s):  
Konstantinos A. Chrysafis ◽  
Basil K. Papadopoulos
Keyword(s):  
Net Present Value ◽  
Fuzzy Numbers ◽  
Cost Of Capital ◽  
Weighted Average ◽  
Present Value ◽  
Major Drawback ◽  
Project Appraisal ◽  
Equity Cost ◽  
Set Up ◽  
Intelligent Methods

The major drawback of the classic approaches for project appraisal is the lack of the possibility to handle change requests during the project’s life cycle. This fact incorporates the concept of uncertainty in the estimation of this investment’s worth. To resolve this issue, the authors use fuzzy numbers, possibilistic moments of fuzzy numbers and the hybrid (fuzzy statistic) fuzzy estimators’ method in order to introduce a fuzzy possibilistic version of the expanded net present value method (FPeNPV). This approach consists of two factors: the fuzzy possibilistic NPV and the fuzzy option premium. For the estimation of the fuzzy NPV, some basic assumptions are taken into consideration: (1) the opportunity cost of capital, used as the present value interest factor calculated through the weighted average cost of capital (WACC), (2) the equity cost, determined through the possibilistic set-up of the capital asset pricing model CAPM, and (3) the inflation factor, also included in the estimation of the NPV. The fuzzy estimators’ method is used for the computation of the fuzzy option premium. An algorithm of nine major steps leads to the computation of the FPeNPV. This gives the administration the opportunity to adapt to potential changes in the company’s internal and external environments. In this way, the symmetry between the planning and execution phase of a project can be reinstated. The results validate the statement that fuzzy and intelligent methods remain valuable tools to express uncertainty in various scientific areas. Finally, an illustrative example aims at a thorough comprehension of this new approach of the expanded NPV method.

scholarly journals Market value calculation and the solution of circularity between value and the weighted average cost of capital WACC

2009 ◽  
Vol 10 (6) ◽  
pp. 101-131 ◽  
Author(s):  
Ignacio Vélez-Pareja ◽  
Joseph Tham
Keyword(s):  
Average Cost ◽  
Cost Of Capital ◽  
Weighted Average ◽  
Cost Of Debt ◽  
Cost Of Equity ◽  
Tax Rate ◽  
Market Values ◽  
Equity Cost ◽  
Tax Payments ◽  
The Cost

Most finance textbooks present the Weighted Average Cost of Capital (WACC) calculation as: WACC = Kd×(1-T)×D% + Ke×E%, where Kd is the cost of debt before taxes, T is the tax rate, D% is the percentage of debt on total value, Ke is the cost of equity and E% is the percentage of equity on total value. All of them precise (but not with enough emphasis) that the values to calculate D% y E% are market values. Although they devote special space and thought to calculate Kd and Ke, little effort is made to the correct calculation of market values. This means that there are several points that are not sufficiently dealt with: Market values, location in time, occurrence of tax payments, WACC changes in time and the circularity in calculating WACC. The purpose of this note is to clear up these ideas, solve the circularity problem and emphasize in some ideas that usually are looked over. Also, some suggestions are presented on how to calculate, or estimate, the equity cost of capital.

A New Approach to Capital Budgeting in Closely-Held Firms and Small Firms

1981 ◽  
Vol 5 (4) ◽  
pp. 30-35 ◽  
Author(s):  
Thomas H. McInish ◽  
Ronald J. Kudla
Keyword(s):  
Small Firms ◽  
Net Present Value ◽  
Cost Of Capital ◽  
Weighted Average ◽  
Capital Budgeting ◽  
Cash Flows ◽  
Separation Principle ◽  
Discount Rates ◽  
Present Value ◽  
Investor Returns

The traditional application of the net present value method in capital budgeting involves the use of market derived discount rates such as the cost of capital. Justification of these discount rates stems from the separation principle that states that investment decisions can be made independent of shareholders' tastes and preferences. The purpose of this paper is to show that the separation principle does not hold for closely-held firms and small firms, and, accordingly, market-derived discount rates are inappropriate. Two capital budgeting techniques which are appropriate for these firms are presented. Accept/reject decisions for capital budgeting projects are often made using a technique known as “net present value” (NPV).1 Using the NPV method, acceptable projects are those for which the project's cost is less than the present value of the project's cash flows discounted at the firm's cost of capital; in other words, acceptable projects have a positive NPV. The firm's cost of capital is usually taken to be the weighted average of the firm's cost of equity and debt as measured by investor returns in the capital markets. Justification for use of a discount rate, determined by reference to market-wide investor returns, is based on “the separation principle” which asserts that corporations can make capital budgeting decisions independently of their shareholders' views.2 But because a critical assumption of the separation principle is that shares are readily marketable, it is likely that the separation principle and, hence, market-determined discount rates are inappropriate for closely-held firms and small firms.3 In this paper, we discuss two capital budgeting approaches which are applicable to firms whose shares are not readily marketable. This paper is divided into five sections. First, we discuss the traditional net present value approach to capital budgeting and, then, we indicate in detail, why it may not be suitable for use by closely-held firms and small firms. In the third and fourth sections, we explain two capital budgeting techniques which may be appropriate for use by these firms. Finally, we summarize our conclusions.

scholarly journals Corporate Finance Practices in India: A Survey

2002 ◽  
Vol 27 (4) ◽  
pp. 29-56 ◽  
Author(s):  
Manoj Anand
Keyword(s):  
Capital Structure ◽  
Corporate Finance ◽  
Firm Size ◽  
Dividend Policy ◽  
Cost Of Capital ◽  
Business Schools ◽  
Capital Budgeting ◽  
Firm Characteristics ◽  
Policy Decisions

The present study surveys 81 CFOs of India to find out about their corporate finance practices vis-a-vis capital budgeting decisions, cost of capital, capital structure, and dividend policy decisions. It analyses the responses by the firm characteristics like firm size, profitability, leverage, P/E ratio, CFO's education, and the sector. The analysis reveals that practitioners do use the basic corporate finance tools that the professional institutes and business schools have taught for years to a great extent. The study also reveals that the corporate finance practices vary with firm size.

scholarly journals New Models for Analyzing Changes in Company Value Based on Stochastic Discount Rates

2019 ◽  
Vol 23 (3) ◽  
pp. 35-48 ◽  
Author(s):  
P. E. Zhukov
Keyword(s):  
Cash Flow ◽  
Cost Of Capital ◽  
Weighted Average ◽  
Cash Flows ◽  
Free Cash Flow ◽  
Discount Rates ◽  
The Third ◽  
Company Value ◽  
New Models ◽  
Zero Growth

We propose new models for analyzing changes in the value of the company using stochastic discount rates. It is shown that for the majority of the companies under study, local changes in the rate of the company value growth (percentage changes to the previous level) are not explained by the corresponding changes neither in the weighted average cost of capital (WACC), nor in the cash flows. This fact, as well as the research results by J. Cochrane, who proved that discount rates volatility is the main contributor to price volatility, became initial prerequisites for building models based on stochastic discount rates. The work presents three models built on stochastic discount rates, where cash flows are assumed to be growing with a certain trend, and the factors affecting the price of the company are described by stochastic discount factors. These models are alternative in relation to the commonly used traditional cash flow discounting (DCF) models where the free cash flow is discounted through the WACC, or the free flow to capital at the opportunity cost of equity. The first model is used to analyze the dependence of the company value on investments. It uses free cash flow subject to zero growth. The second model uses net cash flow from operating activities plus interest, minus the minimum investment subject to zero growth. The third model uses net cash flow from operating activities plus interest adjusted to taxes. This model requires to estimate the rates of the company downsizing subject to zero investment. The third model is applicable for companies with volatile investments, where it is difficult to reliably estimate free cash flow in case of zero growth. The models are designed for analysis of the factors influencing the value of the company for value-based management. Another application of the models is the evaluation of investment value of the company and the answer to the question of its possible overestimated or underestimated value. The third way to apply this model is the empirical evaluation of the weighted average cost of capital applicable to the company’s investment projects, alternative to WACC, assessed by standard methods.

SEROPREVALENCE OF HIV AND HBsAg AMONGST BLOOD DONORS IN A TERTIARY CARE HOSPITAL, CHHATTISGARH.

2019 ◽  
Vol 3 (8) ◽  
Author(s):  
Anusha P ◽  
Bankar Nandkishor J ◽  
Karan Jain ◽  
Ramdas Brahmane ◽  
Dhrubha Hari Chandi
Keyword(s):  
Hepatitis B ◽  
Blood Donors ◽  
Hepatitis B Surface Antigen ◽  
Tertiary Care ◽  
Laboratory Diagnosis ◽  
Blood Bank ◽  
Care Hospital ◽  
Medical College ◽  
The World ◽  
First Time

INTRODUCTION: India being the second highly populated nation in the world. HIV/AIDS has acquired pandemic proportion in the world. Estimate by WHO for current infection rate in Asia. India has the third largest HIV epidemic in the world. HIV prevalence in the age group 15-49 yrs was an estimate of 0.2%. India has been classified as an intermediate in the Hepatitis B Virus (HBV) endemic (HBsAg carriage 2-7%) zone with the second largest global pool of chronic HBV infections. Safety assessment of the blood supply, the quality of screening measures and the risk of transfusion transmitted infectious diseases (TTIs) in any country can be estimated by scrutinizing the files of blood donors. After the introduction of the blood banks and improved storage facilities, it became more extensively used. Blood is one of the major sources of TTIs like hepatitis B, hepatitis C, HIV, syphilis, and many other blood borne diseases. Disclosure of these threats brought a dramatic change in attitude of physicians and patients about blood transfusion. The objective of this study is to determine the seroprevalence of transfusion transmitted infections amidst voluntary blood donors at a rural tertiary healthcare teaching hospital in Chhattisgarh. MATERIAL AND METHODS: This retrospective study was carried out in Chandulal Chandrakar Memorial Medical College, Kachandur, Durg. Blood donors were volunteers, or and commercial donors who donated the blood and paid by patients, their families, or friends to replace blood used or expected to be used for patients from the blood bank of the hospital. After proper donation of blood routine screening of blood was carried out according to standard protocol. Laboratory diagnosis of HIV 1 and HIV 2 was carried out by ELISA test. Hepatitis B surface antigen was screened by using ELISA. RESULTS: A total of 1915 consecutive blood donors’ sera were screened at Chandulal Chandrakar Memorial Medical College, blood bank during study period. Of these 1914 were male and 1 female. The mean age of patients was found to be 29.34 years with standard deviation (SD) of 11.65 Years. Among all blood donors in present study, 759(39.63%) were first time donors and 1156(60.37%) were repeated donors. 1 patient was HIV positive in first donation group while 3 (75%) were positive in repeat donation group. 7 (38.9%) were HBsAg positive in in first donation group while 11(61.1%) were positive in repeat donation group. Two patients in first donation group had dual infection of HIV and HBsAg. CONCLUSION: Seropositivity was high in repeated donors as compared to first time donors. The incidence of HIV is observed to be 0.2% and that of HBsAg is 0.94%. Strict selection of blood donors should be done to avoid transfusion-transmissible infections during the window period.

First report of Rinamba opacicollis Cameron (Hymenoptera: Braconidae, Doryctinae) in India as parasitoid of coffee stem borer, Xylotrechus quadripes (Chevrolat) (Coleoptera: Cerambycidae)

ENTOMON ◽  
2020 ◽  
Vol 44 (4) ◽  
pp. 311-314
Author(s):  
A. Roobakkumar ◽  
H.G. Seetharama ◽  
P. Krishna Reddy ◽  
M.S. Uma ◽  
A. P. Ranjith
Keyword(s):  
Integrated Control ◽  
Host Record ◽  
Stem Borer ◽  
Arabica Coffee ◽  
First Report ◽  
The World ◽  
First Time

Rinamba opacicollis Cameron (Hymenoptera: Braconidae) was collected from Chikkamagaluru, Karnataka, India for the first time from the larvae of white stem borer, Xylotrechus quadripes Chevrolat infesting arabica coffee. Its role in the biological or integrated control of X. quadripes remains to be evaluated. White stem borer could be the first host record of this parasitoid all over the world.

PERSPECTIVE DEVELOPMENT OF WORLD PRODUCTION OF FEEDS FOR AQUACULTURE: ALTERNATIVE SOURCES OF RAW MATERIALS

2017 ◽  
pp. 67-78
Author(s):  
Lina Yurievna Lagutkina
Keyword(s):  
Raw Materials ◽  
Limiting Factors ◽  
Current Status ◽  
Feed Production ◽  
The World ◽  
Market Trends ◽  
Alternative Sources ◽  
World Industry ◽  
First Time ◽  
A Current

The author of the article discloses the prospects of development of the world feed production for aquaculture based on the analysis of key innovative technological and market trends. The author specifies that shortage, high cost, low ecological compatibility of traditional raw materials - fish flour - are among major limiting factors in the development of production of feeds for aquaculture. This fact, in turn, limits sustainable development of aquaculture both in Russia, and in the world in general. The article presents the overview of a current status of the world industry of feed production in aquaculture, where the regional situation is studied, as well. For the first time, there is given the outlook of innovative technologies in feed production based on the alternative sources of protein (on the example of projects of leading aquabiotechnological companies) which will determine industry’s objectives for the mid-term perspective.

History Turmoil And Politico-Cultural Conditions of the Sub-Continental Men In Salman Rushdie’s Midnight’s Children

2015 ◽  
Vol 2 (2) ◽  
pp. 26-28
Author(s):  
Gunasekaran N ◽  
Bhuvaneshwari S
Keyword(s):  
Middle Class ◽  
Salman Rushdie ◽  
Fiction Writing ◽  
Pluralistic Society ◽  
Post Colonial ◽  
Cultural Conditions ◽  
The World ◽  
Midnight's Children ◽  
First Time

Salman Rushdie remains a major Indian writer in English. His birth coincides with the birth of a new modern nation on August 15, 1947. He has been justly labelled by the critics as a post-colonial writer who knows his trade well. His second novel Midnight’s Children was published in 1981 and it raised a storm in the hitherto middle class world of fiction writing both in English and in vernaculars. Rushdie for the first time burst into the world of fiction with subversive themes like impurity, illegitimacy, plurality and hybridity. He understands that a civilization called India may be profitably understood as a dream, a collage of many colours, a blending of cultures and nationalities, a pluralistic society and in no way unitary.

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