Finance / July 19, 2018 / Alianna Dominguez
Questions surrounding enterprise value vs equity value seem to pop up again and again in our corporate training seminars. In general, investment bankers seem to know a lot less about valuation concepts than you’d expect given how much time they spend building models and pitchbooks that rely on those concepts.
Cumulative interest is sometimes used to determine which loan in a series is most economical. However, cumulative interest alone does not account for other important factors, such as initial loan costs (if a lender pays these costs out of pocket as opposed to rolling them over into the loan's balance) and the time value of money.
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