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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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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?

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The Rise of FinTech in Supply Chains

Harvard Business Review

The use of FinTechs allows suppliers to access funding at the multinationals firm’s lower cost of capital.). The supplier gives the buying firm a discount on the invoice amount at the buyer’s lower cost of capital. the supplier gets $9,959 of the $10,000).

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What U.S. CEOs Should Do with the Money from Corporate Tax Cuts

Harvard Business Review

The cost of capital is at historic lows, averaging below 6% for most large U.S. Indeed, for most companies, the value of accelerating growth greatly exceeds the value of returning capital to shareholders. Indeed, for most companies, the value of accelerating growth greatly exceeds the value of returning capital to shareholders.

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Should Companies Retain "Strategic" Cash?

Harvard Business Review

For example, a market downturn is a great time to repurchase stock or to introduce a new marketing campaign against weakened competitors. Strategic cash provides protection against downsides (such as disruptive technologies, economic recessions, and market turmoil) and also offers the opportunity to capture upsides.

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We Can’t Study Short-Termism Without the Right Metrics

Harvard Business Review

Repaying such profits to shareholders through share repurchases is better than misinvesting that cash to diversify into unrelated businesses in which management has no expertise or overinvesting in projects that may not return cost of capital. Consider three examples. What would better measures be?

EPS 9
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How to Quantify Sustainability’s Impact on Your Bottom Line

Harvard Business Review

These ranges were wide due to the relative size of the different players in the supply chain (for example, a company that has higher revenues will realize greater benefits than a smaller firm). These values can be estimated credibly and cost-effectively, and we set about applying them to the Brazilian beef sector. of revenues).