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Originally posted by Anthonyvalueinv:
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I think ultimately it should come down to a Return on Investment. It should be a fairly mathematical decision. For instance, if the Equity risk premium + Risk free rate is 10%, and the company can achieve a return on investment of 11% then the company should take the 11% decision. If they therefore believe that the share price is undervalued by a number that achieves a 11% return on re-rating (or for example, they valued it at $1 and the share price is 0.90. In order to move back to $1 it would = 11.11% increase) then as a value investor, I would argue that this is a better investment.
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Have you factored into this franking credits?
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