I was asked this on an interview (investment banking).
You have two companies which are identical aside from the fact that one is all fixed costs and the other is all variable costs. Which would be worth more in a valuation?
My logic was that an all fixed cost company would have a higher beta, and therefore a higher discount rate by CAPM, and thus a lower valuation by DCF, making the variable cost one worth more.
Sound right?
2007-01-30 13:18:54 · 4 answers · asked by Dethruhate 5 in Business & Finance ➔ Other - Business & Finance
To me it would depend on the type of costs and the amount of variability in them.
2007-02-02 07:15:10 · answer #1 · answered by MSC 5 · 0⤊ 0⤋
this is going strictly off of memory, yet i've got confidence that Mr. Buffet makes use of EBTA as "(unfastened) funds bypass." on an identical time as depreciation is a non-funds fee, i think of his reasoning became into that it would customarily at last exchange right into a needed fee to verify ongoing operations. so some distance as doing the DCF, use a finance calculator in case you have one, or the NPV function in MS Excel.
2016-12-13 04:56:41 · answer #2 · answered by killeen 4 · 0⤊ 0⤋
I was thinking of having a roommate to meet my bills.I am in financial hardship and could lose my home, I thinking of charging 300.00 a month for room and board my food stamps can not cover for two people and I have to pay to all mortgage, condo fees electric and miscellanies bills such as taxes, home,repairs to house and car plus medical bill etc..We are both on disability. How will it affect me as well as her with my benefits and medical coverage?
2015-04-26 05:46:20 · answer #3 · answered by drew 1 · 0⤊ 0⤋
I dont have the answer for this. Did you by any chance find out the answer to this question. I have an ibd internship interview coming and i'm trying to cover my grounds.
2007-02-03 13:05:37 · answer #4 · answered by pologuyn1. 1 · 0⤊ 0⤋