Determining Cost of Capital: The Key to Firm Value

How many vital corporate decisions are based on educated guesses and corporate rules-of-thumb? Effective executive decisions demand a more robust framework of analysis. Making the right decision about major capital investments depends in large measure on the firm's cost of capital. An investment in property, equipment or another company is advisable if the investment will earn the cost of capital. If the investment does not clear this hurdle rate, the value of the firm will decline. The correct assessment of the cost of capital is one of the most critical management decisions. Determining Cost of Capital helps managers identify each source of capital and to differentiate these sources. The books answers several critical questions:What are the factors that attract a firm's cost of capital in the case of each supplier of capital? How does a change in the cost of capital affect the selection of capital projects? How is risk and uncertainty incorporated into the cost of capital? Both the book and accompanying software are designed to be a ready resource to support management efforts in maximising the value of the firm.