A “Golden Age” of the Companies: Conditions of Its Existence
摘要
In this chapter, we continue to study this problem and investigate which companies have the “golden age,” i.e., obey the latter type of dependence of WACC on n (Brusov et al., Journal of Rev Glob Econ 7:88–103, 2018). With this aim we study the dependence of WACC on the age of company n at various leverage levels within a wide spectrum of capital costs values as well as the dependence of WACC on leverage level L at fixed company age n. All calculations have been done within modern theory of capital cost and capital structure BFO by Brusov–Filatova–Orekhova (Brusov et al., Appl Fin Econ 21(11):815–824, 2011; Brusov et al., Res J Econ Bus ICT 2: 16–21, 2011; Brusov et al., Res J Econ Bus ICT 2:11–15, 2011; Brusov et al., Res J Econ Bus ICT 2:16–21, 2011; Brusov et al., Appl Fin Econ 22(13):1043–1052, 2012; Brusov et al., J Rev Glob Econ 1:106–111, 2012; Brusov et al., J Rev Glob Econ 2:94–116, 2013; Brusov et al., J Rev Glob Econ 2:183–193, 2013; Brusov et al., Cogent Econ Fin 2:1–13, 2014; Brusov et al., J Rev Glob Econ 3:175–185, 2014; Filatova et al., Bull FU 48:68–77, 2008). We have shown that existence of the “golden age” of company does not depend on the value of capital costs of the company but depends on the difference between equity k0 and debt kd costs. The “golden age” of company exists at small enough difference between k0 and kd costs, while at high value of this difference the “golden age” of company is absent: curve WACC(n) monotonic descends with n. For the companies with the “golden age” curve, WACC(L) for perpetuity companies lies between curves WACC(L) for company ages n = 1 and n = 3, while for the companies without the “golden age” curve WACC(L) for perpetuity companies is the lowest one.