Remove Benchmarking Remove CAPM Remove Consensus Remove Development
article thumbnail

Still Many Ways to Skin a Capital Cost

Harvard Business Review

The motivation behind it, as with many, many articles published over HBR's nearly 90-year history, was to take an effective practice developed in one corner of industry and spread it to managers everywhere. Did it surprise him to find that there was so little consensus on the best way to solve the problem of assigning a cost to capital?

CAPM 14
article thumbnail

Why Sit on All that Cash? Firms Uncertain on Cost of Capital

Harvard Business Review

There was little consensus about cost of capital practices; instead, respondents typically deployed a plurality of techniques. Only 46 percent use the perpetuity growth model, while 27 percent develop an explicit cash flow forecast for the entire life of a project.