Still Many Ways to Skin a Capital Cost
Harvard Business Review
MARCH 10, 2011
When executives evaluate a potential investment, whether it's to build a new plant, enter a new market, or acquire a company, they weigh its cost against the future cash flows they expect will spring from it. knew that firms were making heavy use of the capital asset pricing model (CAPM) to size up growth opportunities, but that the model was only as good as its inputs. Not at all, he said, because it's "no secret that applying the CAPM is as much an art as financial science."