Remove CAPM Remove DCF Remove Discounted Cash Flow Remove Net Present Value

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. To make sure they're comparing apples to apples, they discount those future cash flows to arrive at their net present value. Not at all, he said, because it's "no secret that applying the CAPM is as much an art as financial science."

DCF 12