SECOND TAKE: FT'S LEX
THE LEX COLUMN: Cash me if you can, the tech giants say
Silicon Valley has not been that creative in returning money to shareholders
By the standards of Silicon Valley, calculations for the weighted average cost of capital and the capital asset pricing model are rather simple.
These equations offer the theoretical principle that companies can create value for shareholders by simply adjusting their net leverage. Debt capital is cheaper than equity. That is because it takes priority in a liquidation as well as the deductibility of interest expense.