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Considerations Regarding Methods And Valuation Models Of Equity Cost Of The Companies

Author

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  • Mihai Nedelescu

    (Romanian American University, Bucharest)

Abstract

For the enterprises, capitals are fewer and fewer and more expensive, and the expected profit in conditions of fierce competition, are more difficult, being accompanied by increasing risks more difficult to predict.The cost is the highest risk element, which accompanies the capital, because, is in inverse proportion to the profit: a higher cost leads to a lower profit. For attracting the sources of capital, a firm must spend certain sums, which are proportional to their price. The content of this paper tries an efficiency of financial structure for companies based on the minimizing of finance costs.In the purpose of efficiency of financial structure has followed the costs for variant of financial structure through point out models of analyses and assemble the costs recommended by international and national specialty literature.

Suggested Citation

  • Mihai Nedelescu, 2013. "Considerations Regarding Methods And Valuation Models Of Equity Cost Of The Companies," Romanian Economic Business Review, Romanian-American University, vol. 8(1), pages 19-33, March.
    • Handle: RePEc:rau:journl:v:8:y:2013:i:1:p:19-33
    as

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    References listed on IDEAS

    as
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    2. Myron J. Gordon & Eli Shapiro, 1956. "Capital Equipment Analysis: The Required Rate of Profit," Management Science, INFORMS, vol. 3(1), pages 102-110, October.
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    4. J. Tobin, 1958. "Liquidity Preference as Behavior Towards Risk," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 25(2), pages 65-86.
    5. Eugene F. Fama & Kenneth R. French, 2004. "The Capital Asset Pricing Model: Theory and Evidence," Journal of Economic Perspectives, American Economic Association, vol. 18(3), pages 25-46, Summer.
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