The interrelationships between cash flows, corresponding discount rates and values follow certain rules, knowing which one can quite easily and correctly find out value of given cash flow using the discounting-by-components framework, or to find the correct formulation of the discount rate for...

The paper discusses common mistakes made by financial profession when valuating cash flows by applying inconsistent weighted average discount rates to cash flows to equity, to unlevered firm, to levered firm or other complex cash flows not regarding their type (constant or growing perpetuities,...

There is little criticism of downside measures approach to estimating risk premiums. Instead, this model attracted attention of both academics and practitioners. For example, Abbas et al (2011) refer to DCAPM as “long-awaited solution for asset pricing problem”. Estrada (2006, 2007), Post...

There is an ongoing dispute about the assumption of reinvesting intermediate cash flows at cost of capital in calculation of NPV and at IRR in calculation of implied yield to maturity. The lack of conclusive evidence lends support to confusion around the issue. This paper provides logical and...

One of the most intricate issues in the long-term financial statements forecasting concerns the employment of accumulated retained earnings for a profitable firm. Reinvesting retained earnings is a strategic choice of far-reaching consequences. Actually, optimistic forecast may imply exponential...

The concept of downside risk is logically approved and plausible for investment evaluation, especially in the absence of normality of underlying distribution of returns. Markowitz (1959) suggested the semivariance and semideviation as proper measures for portfolio selection. The DCAPM is a...

The paper supplies additional explanations to my earlier published article What's Wrong with the Economic Value Added. It stresses that the construction of Accounting based Capital Charge doesn't mean the departure from market values of cost of equity and cost of debt. On the contrary Accounting...