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. by James J. McNulty, Tony D. Yeh, William S. Schulze, and Michael H.

CAPM 13
article thumbnail

A Refresher on Marketing ROI

Harvard Business Review

Some companies establish a threshold for MROI that takes into account its risk tolerance and cost of capital, below which they are hesitant to make investments. And if you end up with a negative ROI, the project is harder to justify on financial terms. To do this, you need to establish your sales baseline.

ROI 8
Insiders

Sign Up for our Newsletter

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

article thumbnail

Divestment Alone Won’t Beat Climate Change

Harvard Business Review

Both of us have done work on sustainable development and are keen to see a transition away from fossil fuels in order to limit climate change. The key argument for fossil fuel divestment is that the cost of carbon dioxide emissions and other pollutants are not being accurately priced by the market.

article thumbnail

Divestment Alone Won’t Beat Climate Change

Harvard Business Review

Both of us have done work on sustainable development and are keen to see a transition away from fossil fuels in order to limit climate change. The key argument for fossil fuel divestment is that the cost of carbon dioxide emissions and other pollutants are not being accurately priced by the market.

article thumbnail

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.

article thumbnail

Why Europe's Carbon Woes Matter to the Whole World

Harvard Business Review

Share prices for European utilities and industrial companies have fallen too, threatening a wave of credit downgrades and increasing companies'' cost of capital. And it will be much harder to attract private capital to infrastructure projects through public-private partnerships.

Price 8
article thumbnail

How CMOs Can Get CFOs on Their Side

Harvard Business Review

Moreover, the previous year’s survey showed that 63 percent of projects do not use analytics to inform marketing decisions. Without a strong business case built on analytics, marketing too often is seen as a cost rather than an investment, despite marketing’s ability to drive above-market growth.

CFO 8