Harvard Business Review

MARCH 10, 2011

When executives evaluate a potential investment, whether it's to build a new plant, enter a new market, or acquire a company, they weigh its cost against the future cash flows they expect will spring from it. Not at all, he said, because it's "no secret that applying the CAPM is as much an art as financial science."

CAPM 15

CAPM Cost Discounted Cash Flow Cost of Capital 15

Harvard Business Review

JUNE 18, 2015

We also know that private equity funds have outperformed public equity markets over the last three decades , even after the fees they charge are accounted for. Furthermore, few PE investors explicitly use the capital asset price model (CAPM) to determine a cost of capital.

CAPM 8

CAPM Discounted Cash Flow Company Rate of Return 8

Harvard Business Review

MARCH 10, 2011

Fully 79 percent of companies, including 91 percent with annual revenues greater than $1 billion, use discounted cash flow techniques. There is less consistency, however, in how organizations estimate cash flows and determine the weighted average cost of capital at which those cash flows are discounted.

Cost of Capital 14

Cost of Capital CAPM Cost Discounted Cash Flow 14