Harvard Business Review

MARCH 10, 2011

To make sure they're comparing apples to apples, they discount those future cash flows to arrive at their net present value. 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. The same is true for the CAPM. ".

CAPM 14

CAPM Cost Discounted Cash Flow Cost of Capital 14

Harvard Business Review

JUNE 18, 2015

For instance, despite the prominent role that discounted cash flow valuation methods play in academic finance courses, few PE investors use discounted cash flow or net present value techniques to evaluate investments. Furthermore, few PE investors explicitly use the capital asset price model (CAPM) to determine a cost of capital.

Discounted Cash Flow 8

Discounted Cash Flow CAPM Company Rate of Return 8

Harvard Business Review

APRIL 2, 2014

You know, the future value of money, the present value of money — money today is worth more than in the future because you can invest it and get interest. Back in the ‘60s, people developed the capital asset pricing model [CAPM] as a way to do that. And the theory that was available then was CAPM. You’re right.

CAPM 8

CAPM Discount Price Finance 8