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Security‐holder cash flows and the valuation of corporate investment projects
Author(s) -
Lewellen Wilbur G.,
Emery Douglas R.
Publication year - 1985
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090060204
Subject(s) - valuation (finance) , cash flow , discounting , capital budgeting , business , asset (computer security) , cost of capital , microeconomics , investment (military) , economics , net present value , present value , finance , pre money valuation , financial economics , computer science , profit (economics) , computer security , production (economics) , project appraisal , politics , political science , law
The difference between adjusted present value and cost‐of‐capital discounting procedures for evaluating corporate real‐asset investment projects is re‐examined. The two approaches are shown to contain different implicit assumptions about the distribution of project cash flows to security‐holders. The consequences thereof for the proper valuation of individual projects in the context of a multiproject investment plan are considered.