The mistaken notion that the internal rate of return (IRR) and net present value (NPV) have required reinvestment rate assumptions built into them was debunked long ago in the academic finance literature. There are no reinvestment rate assumptions built into, or implicit to, the computation and...

Our objective in writing this paper is to share what we have learned about the promise of wind energy and its potential contribution to a comprehensive solution to the long-term energy needs of the U.S. economy. The immediate impetus for our interest came out of a meeting with famed oilman and...

In this paper, we lay out theoretical shortcomings of the IRR criteria that have largely dropped out of the finance literature. We discuss the problem of multiple IRRs and non-existent IRR under a new light. We also discuss the financial ambiguity that can arise when interpreting the IRR. Then,...

One of the perks of reaching the end of a long career in the academy is that you develop an appreciation for how the body of knowledge in your discipline evolves over time. What many of us come to realize that progress can it be painfully slow and at times circuitous. In fact, it is often the...

The traditional approach to evaluating investments in emerging economies has been to add a political default premium to the discount rate used to evaluate the investment's net present value. This approach contrasts with the textbook approach that accounts for political risk by adjusting expected...

Liquidation preference and participation rights are common features of term sheets involving the use of preferred stock in venture financing. Both these features are typically found in venture financing term sheets and enhance the position of the venture investor compared to company founders....

Our objective in this paper is to provide a pedagogical discussion of the process by which creditors take control of distressed firms. Distress or vulture investing requires a high level of business acumen combined with deep knowledge of accounting, finance, and corporate and restructuring law....

Collateralized Loan Obligations (CLOs) are now the largest nonbank lender in the U.S. This added source of financing, which lies outside the purview of banking regulation, is part of the “shadow banking system.” Lack of transparency and regulatory oversight of CLOs have given rise to the...

This case study introduces students to the nuances of deal structuring between company founders and venture capital firms. Specifically, the learning objectives for the case exercise include the following: (1) apply the venture capital method to value entrepreneurial ventures and structure...