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The Weighted Average Cost Of Capital
ittybiz.com
The Weighted Average Cost Of Capital
This is a revisitation of a report I wrote back in late 2016, predicting the imminent end of zero-bound interest rates and warning of the downward pressure that rising rates, mathematically, must place on today’s elevated asset prices.
Since the publication of that report, interest rates have indeed vaulted higher. Look at how the 3-month US Treasury yield has exploded since the start of 2017:
A Little Background
When I was fresh out of college in the mid-90s, I landed a job at Merrill Lynch. I was an “investment banking analyst”, which meant I had no life outside of the office and hardly ever slept. I pretty much spoke, thought, and dreamed in Excel during those years.
Much of my time there was spent building valuation models. These complicated spreadsheets were used to provide an air of quantitative validation to the answers the senior bankers otherwise pulled out of their derrieres to questions like: Is the market under- or over-valuing this company? Can we defend the acquisition price we’re recommending for this M&A deal? What should we price this IPO at?
Back then, Wall Street still (mostly) believed that fundamentals mattered. And one of the most widely-accepted methods for fundamentally valuing a company is the Discounted Cash Flow (or “DCF”) method. I built a *lot* of DCF models back in those days.
I promise not to get too wonky here, but in a nutshell, the DCF approach projects out the future cash flows a company is expected to generate given its growth prospects, profit margins, capital expenditures, etc. And because a dollar today is worth more than a dollar tomorrow, it discounts the further-out projected cash flows more than the nearer-in ones. Add everything up, and the total you get is your answer to what the fair market value of the company is.
…click on the above link to read the rest of the article…
Exclusive: Major Climate Denial Funders Donors Trust and Donors Capital Fund Handled $479 Million Of Dark Money
Exclusive: Major Climate Denial Funders Donors Trust and Donors Capital Fund Handled $479 Million Of Dark Money
More than $470 million of cash flowing into a key funding arm of the climate science denial movement in the United States is untraceable, a DeSmog investigation has found.
Sister organisations Donors Trust (DT) and Donors Capital Fund (DCF) declared an income of $511 million between 2005 and 2012, tax records show.
But a DeSmog analysis of the sources of DT and DCF income finds that some $479 million of the income is “dark money” coming from individuals or groups who do not have to declare their donations.
The amount of untraceable cash moving through DT and DCF is likely to be increasing substantially. In 2013, the two groups had their biggest year to date with a combined income of $152m and cash assets of $138m. Donors Trust itself saw income more than double from $46m in 2012 to $103m in 2013 even though the value of grants it handed out remained stable at about $40m each year.
While the role of DT and DCF in financing the climate science denial movement has been known for several years, DeSmog’s investigation reveals for the first time the true scale of untraceable money flowing through the two funds, which share an address in Virginia.
DeSmog’s investigation found just $32 million of donations to the two conservative-aligned funding arms originated with other non-profits that make tax records and details of donations available in public documents.
Both DT and DCF have funneled money to high profile advocacy groups that campaign against regulations to cut greenhouse gases and promote fringe and discredited views on climate science.
While Greenpeace analysis reviewed by DeSmog shows DT andDCF have given $170m over the years to fund other groups blocking climate change action, the source of the Donors’ network income remains largely hidden.
…click on the above link to read the rest of the article…
