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To: kjhwang who wrote (414)	3/8/2000 11:13:00 PM
From: Chuzzlewit	Respond to of 419

TCI, Actually, debt plays no role in dcf other than a providing a hurdle rate and a tax shield. When you make an investment you simply ask that the investment return an IRR greater than the appropriate risk-adjusted rate of return (cash on cash). Studies have shown that shifting the capital structure of the company by changing leverage has little, if any affect on the WACC. Likewise, depreciation and amortization are relevant only because they affect income taxes. In theory, the only relevant metrics are projected cash flow and the WACC. In practice calculations based solely on these parameters are often useless because businesses using new technologies must make continuing and often unforeseen investments which renders the use of WACC as a hurdle rate suspect IMO because it ignores the riskiness of the specific project or acquisition. TTFN, CTC

To: kjhwang who wrote (414)	3/9/2000 9:46:00 AM
From: Steve Robinett	Read Replies (2) \| Respond to of 419

-tci The question is whether you know how to gather accurate facts for a discounted cash flow analysis. Obviously not. Read AOL's 10-Q. Read TWX's 10-Q. Get facts before you crunch numbers. Your procrustean approach to analysis yields only predetermined conclusions. You will find actual facts more useful than wishful thinking. You seem to believe that enormous quantities of debt and slower future growth are formulas for success--duh. Tell that to P&G that just got whacked 30% on the mere suggestion that growth would slow going forward. Funny, that was what happened to AOL, too. To answer your question directly, yes, I understand the roll of debt in discounted cash flow models. I also understand that if number crunching was all it took to invest successfully, all the accountants would be retired. It also requires judgment. Best --Steve