Home  Journals  Financial Analytics: Science and Experience  9(33) - 2010 August

About the Accounting of Borrowed Capital in the Models of Cash Flow for Equity Capital

Available online: 9 August 2010

Subject Heading: BUSINESS ESTIMATION

JEL Classification: 

The task of modeling cash flow for equity capital in the limits of income approach for business evaluation is regarded. The difficulty of practical use of cash flow model on the equity capital is caused by the lack of satisfactory prognostication models for the debts in the prognostic period. On the other hand, the use of the discounting cash flow model on the invested capital does not allow optimizing the financing of cash flow on the equity capital. In the article, it is shown how to model cash flow on the equity capital taking into account the optimization of the remaining actual debts.

Keywords: assessment, business, income approach, income discounting method, cost, equity, borrowed capital, weighted average cost, of invested capital, prognostication, structure

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ISSN 2311-8768 (Online)
ISSN 2073-4484 (Print)

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