Enron Mail

From:mark_guinney@watsonwyatt.com
To:dwindham@uclink4.berkeley.edu, jeff.dasovich@enron.com
Subject:Re[2]: AHP Case
Cc:guinney@haas.berkeley.edu, jcjcal02@aol.com, jdasovic@enron.com,jjackson@haas.berkeley.edu
Bcc:guinney@haas.berkeley.edu, jcjcal02@aol.com, jdasovic@enron.com,jjackson@haas.berkeley.edu
Date:Mon, 26 Feb 2001 00:55:00 -0800 (PST)

Dylan,

You shouldn't use a riskless rate not because of risk of the tax shield but by
leveraging up the risk of the firm increases, i.e. default risk/bankruptcy
risk.
A more appropriate rate should be the rate on the debt as determined by the
market.

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Mark D. Guinney, CFA
Consultant
Watson Wyatt Investment Consulting
345 California Street, Ste. 1400
San Francisco, CA 94104
(415) 733-4487 ph.
(415) 733-4190 fax