Remove Benchmarking Remove CAPM Remove Discounted Cash Flow Remove Finance
article thumbnail

Still Many Ways to Skin a Capital Cost

Harvard Business Review

Estimating the rate at which to discount the cash flows — the cost of equity capital — is an integral part of the exercise, and the choice of rate has a significant effect on estimates of a project's or a company's value. The same is true for the CAPM. ". McNulty et al.

CAPM 13
article thumbnail

What Private Equity Investors Think They Do for the Companies They Buy

Harvard Business Review

In particular, we are interested in how many of their responses correlate with what academic finance knows and what it teaches. Furthermore, few PE investors explicitly use the capital asset price model (CAPM) to determine a cost of capital. the notion that debt financing can be “cheap” at certain times).

article thumbnail

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

Harvard Business Review

This is the key finding of the Current Trends in Estimating and Applying the Cost of Capital research released this week by the Association for Financial Professionals, a trade group of 16,000 corporate treasury and finance practitioners. Download this pdf for an executive summary, or login here for the full report.)