Cost of Capital: Provides guidance for better financial decisions for the company

Author: (English) Ogilvy et al. (Auth.), Song Yunling et al. (Trans.)
Publisher:
Publishing Date: 2005-08-01
Features: This book is a must-read for anyone involved in practical capital cost decision-making. It is written for beginners, yet it still prompts professionals to rethink practical issues. — Bloomberg Capital is the lifeblood of any business, and considering capital costs is crucial for sound decision-making. This book provides a practical and comprehensive guide on this topic, which should be highly valuable to all business professionals involved in strategic and financial issues. — Chief Economist, British Railways This is a well-balanced book that effectively bridges theory and practice, offering a comprehensive and practical guide for practitioners facing major issues related to the evaluation using discounted cash flow methods. — Minister of Accounting and Evaluation Research, KPMG International Evaluation has always been a confusing field. There are many methods, but few guidelines. Ogilvy, Rappaport, and Spencer have filled an important gap. This book should be a must-read for those involved in international transactions. — Professor of International Business, Duke University Capital cost is a fundamental financial tool for business decisions. It drives value creation and destruction metrics; it forms the basis for making decisions using cash flows and other frameworks. The purpose of this book is to help business professionals utilize capital costs in real-world situations. The actual cost of capital describes the key issues in understanding and applying capital costs in today's world, drawing on principles from financial management. The authors apply these principles to the context of major investment decisions. For example, when evaluating new investments and acquisitions, should a company use its own cost of capital? What cost of capital should a U.S. company use when evaluating an investment in a location, such as the Philippines? For a typical investment, which risks are more important—specific risk or systematic risk? How should these risks be reflected in, for instance, risk capital situations? Debt is cheaper than equity—so why don't companies raise more debt? In evaluation and appraisal, most practitioners use the weighted average cost of capital—but how can other methods be used? This book will help you find the answers to these questions. The Actual Cost of Capital is a must-read for anyone involved in practical capital cost decision-making. It integrates new academic insights into real-world requirements and, drawing on the authors' experience in consulting for governments and blue-chip companies, keeps readers up-to-date. The Actual Cost of Capital covers topics such as model selection, calculating the cost of capital using real data, and calculating the cost of capital in an international context. The book also includes examples of applying the cost of capital in business valuation, high-tech enterprises, and discounts and premiums with a wide range of applicable capital costs.