The Cost of Capital

The Cost of Capital

This book provides a clear conceptual understanding of the cost of capital and a critical, comprehensive, and up-to-date evaluation of the practical means available to estimate its magnitude.

Author: Cleveland S. Patterson

Publisher: Greenwood Publishing Group

ISBN: 0899308627

Category: Business & Economics

Page: 315

View: 584

Knowledge about the magnitude of the cost of capital invested in an asset and its determinants is essential for analysis of corporate investment decisions and profitability. This book provides a clear conceptual understanding of the cost of capital and a critical, comprehensive, and up-to-date evaluation of the practical means available to estimate its magnitude. In-depth discussions of the theoretical and empirical basis for the frequently-used DCF and CAPM methods, and practical advice for their implementation are included. The book is intended primarily for professional managers, but will also be useful for future managers in advanced capital budgeting courses.
Categories: Business & Economics

Regulatory Risk and the Cost of Capital

Regulatory Risk and the Cost of Capital

Austrian Controller Award 2005 This book develops a comprehensive concept of regulatory risk integrating existing theoretical and empirical research.

Author: Burkhard Pedell

Publisher: Springer Science & Business Media

ISBN: 9783540308027

Category: Business & Economics

Page: 221

View: 218

Austrian Controller Award 2005 This book develops a comprehensive concept of regulatory risk integrating existing theoretical and empirical research. The focus is on explaining how the design of the regulatory system influences the risk of a rate-regulated firm, as well as on elaborating appropriate methods for the determination of the regulatory rate base and the allowed rate of return. Regarding the regulatory rate base, the question of whether market value of capital or book value of assets should be employed and the choice of the depreciation scheme are at the center of the discussion. Specific methodical issues concerning cost of capital assessment for rate-regulated firms are analyzed, i.e. the circularity of rate regulation, the sharing of risks between capital owners and rate payers, the length of the regulatory review period, the regulation of the capital structure as well as the conversion of a post-tax to pre-tax weighted average cost of capital.
Categories: Business & Economics

Cost of Capital

Cost of Capital

Praise for Cost of Capital, Fourth Edition "This book is the most incisive and exhaustive treatment of this critical subject to date." —From the Foreword by Stephen P. Lamb, Esq.

Author: Shannon P. Pratt

Publisher: John Wiley & Sons

ISBN: 0470886714

Category: Business & Economics

Page: 832

View: 719

Praise for Cost of Capital, Fourth Edition "This book is the most incisive and exhaustive treatment of this critical subject to date." —From the Foreword by Stephen P. Lamb, Esq., Partner, Paul, Weiss, Rifkind, Wharton & Garrison LLP, and former vice chancellor, Delaware Court of Chancery "Cost of Capital, Fourth Edition treats both the theory and the practical applications from the view of corporate management and investors. It contains in-depth guidance to assist corporate executives and their staffs in estimating cost of capital like no other book does. This book will serve corporate practitioners as a comprehensive reference book on this challenging topic in these most challenging economic times." —Robert L. Parkinson Jr., Chairman and Chief Executive Office, Baxter International Inc., and former dean, School of Business Administration and Graduate School of Business, Loyola University of Chicago "Shannon Pratt and Roger Grabowski have consolidated information on both the theoretical framework and the practical applications needed by corporate executives and their staffs in estimating cost of capital in these ever-changing economic times. It provides guidance to assist corporate practitioners from the corporate management point of view. For example, the discussions on measuring debt capacity is especially timely in this changing credit market environment. The book serves corporate practitioners as a solid reference." —Franco Baseotto, Executive Vice President, Chief Financial Officer, and Treasurer, Foster Wheeler AG "When computing the cost of capital for a firm, it can be fairly said that for every rule, there are a hundred exceptions. Shannon Pratt and Roger Grabowski should be credited with not only defining the basic rules that govern the computation of the cost of capital, but also a road map to navigate through the hundreds of exceptions. This belongs in every practitioner's collection of must-have valuation books." —Aswath Damodaran, Professor, Stern School of Business, New York University "Pratt and Grabowski have done it again. Just when you thought they couldn't possibly do a better job, they did. Cost of Capital, Fourth Edition is a terrific resource. It is without a doubt the most comprehensive book on this subject today. What really distinguishes this book from other such texts is the fact that it is easy to read—no small feat given the exhaustive and detailed research and complicated subject matter. This book makes you think hard about all the alternative views out there and helps move the valuation profession forward." —James R. Hitchner, CPA/ABV/CFF, ASA, Managing Director, Financial Valuation Advisors; CEO, Valuation Products and Services; Editor in Chief, Financial Valuation and Litigation Expert; and President, Financial Consulting Group "The Fourth Edition of Cost of Capital continues to be a 'one-stop shop' for background and current thinking on the development and uses of rates of return on capital. While it will have an appeal for a wide variety of constituents, it should serve as required reading and as a reference volume for students of finance and practitioners of business valuation. Readers will continue to find the volume to be a solid foundation for continued debate and research on the topic for many years to come." —Anthony V. Aaron, Americas Leader, Quality and Risk Management, Ernst & Young Transaction Advisory Services
Categories: Business & Economics

The Real Cost of Capital

The Real Cost of Capital

"This book is required reading for anyone involved in the practical issues of cost of capital decisions.

Author: Tim Ogier

Publisher: Pearson UK

ISBN: 9780273748250

Category: Business & Economics

Page: 320

View: 481

"This book is required reading for anyone involved in the practical issues of cost of capital decisions. It is written in a way that engages the novice, and yet challenges the professional to rethink the real issues." Brendan Scholey, Bloomberg. The cost of capital is the fundamental financial tool for business decision-making. It drives measures of value creation and destruction, and forms the basis of financial analysis using cash flow and other frameworks. This book is here to help the business world to use the cost of capital for real. The Real Cost of Capital describes the key issues in understanding and using the cost of capital today, taking principles from the world of managerial finance and putting them into the context of major investment decisions. Should, for example, a company use its own cost of capital to appraise new investments and acquisitions? What cost of capital might a US company use when appraising an investment in, say, the Philippines? For a typical investment, which type of risk is more important – specific risk or systematic risk? How should these risks be reflected in, say, a venture capital situation? Debt is cheaper than equity – so why don’t companies raise more debt than they do? Most practitioners use the weighted average cost of capital ("WACC") in valuation and appraisal – but when should an alternative approach be used? This book will help you find the answers. The Real Cost of Capital is required reading for anyone involved in the practical issues of cost of capital decisions. It brings together the latest academic thinking with practical requirements in a real-life context, and the authors have used their combined experience of advising governments and international blue-chip companies to bring readers up to date with current issues. The Real Cost of Capital includes chapters on choosing models, calculating the cost of capital using real-life data sources, and calculating the cost of capital in an international context (a subject not usually covered in academic texts). It also has chapters and worked examples on the practical application of the cost of capital in business valuations, high-tech situations and the wide range of premia and discounts that can be applied to the cost of capital. The book has an associated website www.costofcapital.net which contains some current links. The site also gives access to tax rate information and financial data relevant to using cost of capital around the world. The objective is to make sure that the corporate planner, student, adviser or decision maker, when she/he is on the road, can simply open the book or dial in and take advantage of a wealth of decision-making support, without the pain of extended academic study.
Categories: Business & Economics

Assessing the Cost of Capital

Assessing the Cost of Capital

The cost of capital lies at the heart of corporate finance, where the individual costs of the firm's sources of finance are evaluated.

Author: John Pointon

Publisher: Financial Times/Prentice Hall

ISBN: NWU:35556034033068

Category: Business & Economics

Page: 142

View: 181

The cost of capital lies at the heart of corporate finance, where the individual costs of the firm's sources of finance are evaluated. To be able to assess the cost of capital is vital to your company's strategic plan. This briefing provides you with the means to do so.
Categories: Business & Economics

Cost of Capital in Litigation

Cost of Capital in Litigation

This new compilation is an important contribution to the field of valuation and will serve as an imminently helpful resource for attorneys and judges.

Author: Shannon P. Pratt

Publisher: John Wiley & Sons

ISBN: 0470944919

Category: Business & Economics

Page: 336

View: 716

Cost of Capital in Litigation addresses cost of capital issues in litigation and discusses major decisions, highlighting how to avoid errors that have often been made by experts. The book helps the attorney and valuation expert understand the decisions within the context of the theory of cost of capital and includes a chapter on cross-examining experts on cost of capital issues. Throughout, there are citation to relevant material and cross-reference to Cost of Capital: Applications and Examples, Fourth Edition.
Categories: Business & Economics

The Cost of Capital

The Cost of Capital

15 Regulated utilities An important specific application of the cost of capital is in
public sector regulation of certain companies that are in a monopolistic position ,
by virtue of what they do . The most important examples are utility companies ...

Author: Seth Armitage

Publisher: Cambridge University Press

ISBN: 0521000440

Category: Business & Economics

Page: 353

View: 690

This book provides an answer to the question, 'What does the finance and economics literature say about the determination and estimation of a project's cost of capital?'. Uniquely, it reviews both the theory of asset pricing in discrete time and a range of more applied topics which relate to project valuation, including the effects of corporate and personal taxes, the international dimension, estimation of the cost of equity in practice, and the cost of capital for regulated utilities. It seeks to explain models and arguments in a way which does justice to the reasoning, whilst minimising the prior knowledge of finance and maths expected of the reader. It acts as a bridge between a general undergraduate or MBA text in finance, accounting or economics, and the modern theoretical literature on the cost of capital.
Categories: Business & Economics

Cost of Capital

Cost of Capital

Author:

Publisher:

ISBN: PSU:000065042717

Category: Capital costs

Page:

View: 776

Categories: Capital costs

Information Volatility and the Cost of Capital

Information  Volatility and the Cost of Capital

This is the purpose of this dissertation to investigate the relations between information,stock volatility and the cost of capital.

Author: Tanguy de Launois

Publisher: Presses univ. de Louvain

ISBN: 9782874631740

Category: Business & Economics

Page: 274

View: 623

We all have in mind a couple of dramatic examples of how information released by some economical or political entity resulted in tremendous consequences for a private company or, worst, for the whole financial market. This is the purpose of this dissertation to investigate the relations between information,stock volatility and the cost of capital. After the extension of the standard CAPM model to a more realistic world where some investors are “constrained” and deviate from their optimal CAPM quantities, we confront our theoretical model to the empirical reality by investigating the so-called “index effect”. Thanks to econometric specifications robust to endogeneity, we test different hypotheses proposed by the literature to explain this well known value premium of firms belonging to large indices. In a next step, we investigate how the quality and quantity of micro and macro public signals impact the main determinants of our pricing equation initially developed. We show that in a world of constrained investors, firms benefiting from a high deviation have less incentive to communicate than others. Finally, we study the link between public information and conditional volatility thanks to an original sample of several tens of thousands of Reuters and Dow Jones news releases on both the French and US markets. Thanks to various econometric specifications like GARCH models and Markov Switching Regressions, we conclude that a larger daily number of news releases increases the probability to be in the high probability regime and that the impact ofinformation is strongly dependent on the topic and the timing of the release of this information.
Categories: Business & Economics

Tax Reform and the Cost of Capital

Tax Reform and the Cost of Capital

5 Summary and Conclusion The purpose of this chapter is to evaluate the
usefulness of the cost of capital approach as a practical guide to tax reform .
Auerbach and Jorgenson ( 1980 ) introduced the key concept , the marginal
effective tax ...

Author: Dale Weldeau Jorgenson

Publisher: Oxford University Press

ISBN: 0198285930

Category: Business & Economics

Page: 183

View: 395

The Lindahl Lectures, inaugurated by the University of Uppsala on Monetary and Fiscal Policy, are given every two years in honour of Erik Lindahl, a distinguished Swedish economist.Tax Reform and the Cost of Capital, the first set of lectures in the series, surveys the new theoretical links between monetary theory and public finance. The book is divided into three sections: the cost of capital; the cost of elasticities and the costs of reform; and the trade-off betweenequity and efficiency.
Categories: Business & Economics

The Cost of Capital in Japan

The Cost of Capital in Japan

This paper surveys the extensive literature on whether the cost of capital is low in Japan, and related topics.

Author: Jeffrey A. Frankel

Publisher:

ISBN: UCSD:31822007617590

Category: Capital

Page: 79

View: 565

This paper surveys the extensive literature on whether the cost of capital is low in Japan, and related topics.
Categories: Capital

2016 Valuation Handbook Industry Cost of Capital

2016 Valuation Handbook   Industry Cost of Capital

Use the information in this book to (i) benchmark, (ii) augment, and (iii) provide additional support for your own custom analyses of the industry in which a subject business, business ownership interest, security, or intangible asset ...

Author: Roger J. Grabowski

Publisher: Wiley

ISBN: 1119132479

Category: Business & Economics

Page: 336

View: 519

The most recent cost of capital data for approximately 180 U.S. industries, identified by Standard Industrial Classification (SIC) code. The 2016 Valuation Handbook – Industry Cost of Capital provides valuation professionals with the same type of rigorous industry-level analysis previously published in the green-cover Morningstar/Ibbotson Cost of Capital Yearbook (now discontinued). Using the most recent, up-to-date data is critical. The 2016 Valuation Handbook – Industry Cost of Capital provides up-to-date data as it is updated annually (with data through March), and includes three intra-year Quarterly Updates (June, September, and December; Quarterly Updates are (i) optional, and (ii) not sold separately). The new 2016 edition of the book is updated with data through March 31, 2016 (the prior 2014 and 2015 editions are also available, with data through March 31, 2014 and March 31, 2015, respectively). The 2016 Valuation Handbook – Industry Cost of Capital provides up to eight (8) cost of equity capital and weighted average cost of capital (WACC) estimates for each of the U.S. industries covered in the book, plus capital structure, valuation (trading) multiples, sales, market capitalization, capital structure, several levered and unlevered beta estimates (e.g. ordinary-least squares (OLS) beta, sum beta, downside beta, etc.), financial and profitability ratios, equity returns, aggregate forward-looking earnings-per-share (EPS) growth rates, and more. For more information about Duff & Phelps valuation data resources published by Wiley, please visit www.wiley.com/go/valuationhandbooks. Also Available 2016 Valuation Handbook – Guide to Cost of Capital 2016 International Valuation Handbook – Guide to Cost of Capital 2016 International Valuation Handbook – Industry Cost of Capital Key Features Access cost of capital estimates and betas for approximately 180 U.S. industries. Reference industry-level valuation multiples, growth rates, sales, capital structure, profitability ratios, plus statistics that enable the user to gauge the impact of 'debt-like' off-balance sheet items on the capital structure of the subject industry. Use the information in this book to (i) benchmark, (ii) augment, and (iii) provide additional support for your own custom analyses of the industry in which a subject business, business ownership interest, security, or intangible asset resides. Ensure that you are using the most up-to-date information available by adding the intra-year Quarterly Updates.
Categories: Business & Economics

Cost of Capital Tutorial

Cost of Capital Tutorial

Cost. of. Capital. Tutorial. Questions. and. Answers. The following questions
should be answered by circling “True” or “False”. 1. A company's cost of capital is
simply the interest expense incurred on any funds the company may have
borrowed.

Author:

Publisher: Richard Malekian

ISBN:

Category:

Page:

View: 437

Categories:

Cost of Capital in Managerial Finance

Cost of Capital in Managerial Finance

Having reviewed the technical cost-of-capital literature in the previous chapter,
the aim of this chapter is to discuss previous research on the application of cost-
ofcapital determination techniques by practitioners and to compare findings from
 ...

Author: Dennis Schlegel

Publisher: Springer

ISBN: 9783319151359

Category: Business & Economics

Page: 245

View: 980

This book examines cost-of-capital models and their application in the context of managerial finance. This includes the use of hurdle rates in capital allocation decisions, as well as target returns in performance management. Besides a review of classical finance models such as the Capital Asset Pricing Model (CAPM), other contemporary models and techniques to determine the cost-of-capital of business units and private companies are discussed. Based on a mixed methods approach, current cost-of-capital practices and their determinants are empirically analyzed among German companies.
Categories: Business & Economics

COST OF CAPITAL A FINANCIAL TOOL TO CREATE AND MAXIMIZE SHAREHOLDER VALUE

COST OF CAPITAL  A FINANCIAL TOOL TO CREATE AND MAXIMIZE SHAREHOLDER VALUE

The cost of capital is important in the financial management of every business. A
measure of the cost of capital is required when evolucing various aspects of
strategic business plans, e.g., selecting a financial leverage position, calculating
the ...

Author: EMMANUEL ATTAH KUMAH

Publisher: Lulu.com

ISBN: 9781304260451

Category:

Page:

View: 949

Categories: