Why Sit on All that Cash? Firms Uncertain on Cost of Capital
Harvard Business Review
MARCH 10, 2011
Only 46 percent use the perpetuity growth model, while 27 percent develop an explicit cash flow forecast for the entire life of a project. Fully 72 percent develop multiple cash flow scenarios representing the expected outcome as well as best- and worst-case outcomes, which are then discounted. Book vs. Market Weighting Factors Used for Debt and Equity in Calculation of WACC. . Current market debt/equity ratio. Current book debt/current market equity ratio.