Harvard Business Review

MARCH 10, 2011

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.

Cost of Capital 15

Cost of Capital CAPM Cost Discounted Cash Flow 15

Harvard Business Review

MARCH 10, 2011

It's the opening paragraph of a Harvard Business Review article called "What's Your Real Cost of Capital?" knew that firms were making heavy use of the capital asset pricing model (CAPM) to size up growth opportunities, but that the model was only as good as its inputs. The same is true for the CAPM. ". by James J.

CAPM 15

CAPM Cost Discounted Cash Flow Cost of Capital 15

Harvard Business Review

JUNE 18, 2015

Furthermore, few PE investors explicitly use the capital asset price model (CAPM) to determine a cost of capital. Another indication that PE investors are skeptical of CAPM-based methods for valuing companies is the fact that they rely on exit multiples as a shorthand for evaluating their investments. (If

CAPM 8

CAPM Discounted Cash Flow Company Rate of Return 8

Harvard Business Review

APRIL 2, 2014

Back in the ‘60s, people developed the capital asset pricing model [CAPM] as a way to do that. And the theory that was available then was CAPM. And in those early tests, it seemed like market prices mostly obeyed both CAPM and the efficient market hypothesis. But everybody still uses the method that came out of CAPM.

CAPM 10

CAPM Discount Price Finance 10