tag:blogger.com,1999:blog-7294165939647321702.post7626597158878229328..comments2024-03-11T10:31:06.107-04:00Comments on <center><a href="http://www.barelkarsan.com">Barel Karsan - Value Investing</a></center>: Fixed Costs Not So FixedSaj Karsanhttp://www.blogger.com/profile/04493152766022812984noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-7294165939647321702.post-17596611823694680042009-04-23T19:26:00.000-04:002009-04-23T19:26:00.000-04:00Hi skoper,
It's discounted with the cost of debt ...Hi skoper,<br /><br />It's discounted with the cost of debt because the lease amount IS debt. It's akin to buying an asset and financing it completely with debt: those debt payments would obviously be discounted at the cost of debt. Make sense?Saj Karsanhttps://www.blogger.com/profile/04493152766022812984noreply@blogger.comtag:blogger.com,1999:blog-7294165939647321702.post-52719668451149008712009-04-23T19:10:00.000-04:002009-04-23T19:10:00.000-04:00Hey Saj, I understand that operating leases are di...Hey Saj, I understand that operating leases are discounted by the cost of debt to determine the present value. Why is the cost of debt and not the overall cost of capital, given that the company will use its future capital structure (equity and debt) to pay for these future obligations?Unknownhttps://www.blogger.com/profile/15283555679666560831noreply@blogger.com