The Cost of Capital, Corporation Finance and the Theory of Investment
Citations
49,666 citations
28,434 citations
[...]
14,563 citations
[...]
13,984 citations
13,489 citations
References
46 citations
"The Cost of Capital, Corporation Fi..." refers background or methods in this paper
...22 From Proposition I we derived Proposition II [equation (8)] which, taking the simplest version with r constant, asserts that, for all firms in a class, the relation between the yield on common stock and financial structure, measured by DjlSj, will approximate a straight line with slope (pk7-r) and intercept PkT....
[...]
...Our Proposition II as given in equation (8) would continue to be valid, of course, even in the unlikely event that pk'<r, but the slope of MM' would be negative....
[...]
...Substituting in (9) and simplifying, we obtain equation (8)....
[...]
...which is the exact analogue of Proposition II, as given by (8)....
[...]
...Or equivalently, the market price of any share of stock is given by capitalizing its expected return at the continuously variable rate ij of (8)....
[...]
15 citations
"The Cost of Capital, Corporation Fi..." refers background in this paper
...According to the received view, as shown in equation (17) the average cost of capital, Yr/V, should decline linearly with leverage as measured by the ratio D/V, at least through most of the relevant range....
[...]
13 citations
8 citations
"The Cost of Capital, Corporation Fi..." refers background in this paper
...25 If the value of shares were really given by (14) then the over-all market value of the firm must be:...
[...]
3 citations