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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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20 Quotes From The Daily Drucker

Six Disciplines

The ultimate test of an information system is that there are no surprises. Until a business returns a profit that is greater than its cost of capital, it does not create wealth -- it destroys it. It's much easier to sell the Brooklyn Bridge than to give it away. Nobody trusts you if you offer something for free.

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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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Still Many Ways to Skin a Capital Cost

Harvard Business Review

It's the opening paragraph of a Harvard Business Review article called "What's Your Real Cost of Capital?" They believed managers needed a better way to come up with a number to represent their cost of capital, and that's what they were presenting. That paragraph isn't my own writing. by James J. McNulty, Tony D.

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A Refresher on Marketing ROI

Harvard Business Review

It also informs future spending levels, allocation of the budget across programs and media, and which messages a marketer chooses. While MROI is not usually public information, managers can use published financial statement data to estimate MROI for a competitor. Comparing marketing efficiency with competitors.

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How to Quantify Sustainability’s Impact on Your Bottom Line

Harvard Business Review

Our research has found that embedded sustainability drives financial performance through mediating factors such as innovation, operational efficiency, risk reduction, employee recruitment, engagement and retention, customer and supplier loyalty, competitive advantage, reduced cost of capital, and improved marketing and sales.

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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.