Remove Benchmarking Remove CAPM Remove DCF Remove Market Risk

Still Many Ways to Skin a Capital Cost

Harvard Business Review

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."

DCF 12