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A Refresher on Cost of Capital

Harvard Business Review

You’ll likely be asked to show that the return on the investment will be better than your company’s cost of capital. What is the cost of capital? “The cost of capital is simply the return expected by those who provide capital for the business,” says Knight. Further Reading.

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

Harvard Business Review

Many are deeply uncertain about which initiatives they should fund — and one root of this indecision is a general lack of confidence in the cost of capital projections they are using to make the call. We find that 55 percent of respondents are convinced their cost of capital estimates are off by more than 50 basis points.

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The Challenge Of Achieving Sustained Growth - Take Two

Six Disciplines

over the 10 years ending in 2008 and earn back their cost of capital. As reported in the Harvard Business Review's Daily Stat , the consulting group Bain's updated global database of Sustained Value Creators found only 12% of companies worldwide managed to grow profits and revenues more than 5.5%

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Entrepreneurship Suffers When Well-Paid Jobs Are Plentiful

The Horizons Tracker

The author believes that while lower costs of capital would certainly help raise the entrepreneurship rate, it would be most beneficial to entrepreneurs with lower skills. This would have less of an impact on higher-skilled entrepreneurs, for whom the decline has been most pronounced.

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20 Quotes From The Daily Drucker

Six Disciplines

Until a business returns a profit that is greater than its cost of capital, it does not create wealth -- it destroys it. Nobody trusts you if you offer something for free. The ultimate test of an information system is that there are no surprises. If the answer is no, the reaction must be "What do we do now?"

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How Passion Can Revolutionize Digital Technology, AND Change The.

Terry Starbucker

And change it did, because the new CEO had a vision that went beyond product, and costs, and overhead, and costs of capital. It was about passion. And about people who have it. Thirteen years later, the stock price is now above $240, and it has a market cap bigger than Microsoft. That company is Apple.

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The Complexity of Business Communication

CoachStation

Compare Michael Porter’s competitive advantage definition: “Competitive advantage, sustainable or not, exists when a company makes economic rents, that is, their earnings exceed their costs (including cost of capital).” Is change communication in your organisation more like the first example or the second?