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Adapt Your Strategy to Higher Interest Rates

Harvard Business Review

While many executives and investors were thrown by last year’s interest rate increases, the cost of capital needn’t be a threat. Companies that integrate the cost of capital into their strategy and planning reap real benefits. When something is cheap, people waste it.

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Sustainable Investment Funds Can Encourage Worse Behavior

The Horizons Tracker

Subsequently, leveraging historical data, the researchers evaluated the responses of the highest and lowest polluting groups to fluctuations in their capital costs, an impact similar to the objectives of the sustainable investing movement.

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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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Managers Need to Relearn How Interest Rates Work

Harvard Business Review

With cost of capital this low, many managers have paid scant attention to the time value of money — an essential concept in doing financial analysis. In the United States, short-term interest rates have been near zero for most of the last 15 years.

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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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