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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.
List of contents
Introduction.- Background: Cost-of-Capital in the Finance Literature.- Previous Results on Cost-of-Capital Practices.- Research Philosophy and Ethics.- Empirical Research Approach and Methods.- Primary Research: Expert Interviews.- Primary Research: Company Survey.- Conclusion and Contribution to Knowledge.- Appendix.
About the author
Dennis Schlegel is an expert in the field of Managerial Finance and Accounting. He graduated with a PhD from Leeds Beckett University, UK. He currently holds a position as a consultant at a Big Four audit and advisory firm in Germany and is a visiting lecturer at various universities.
Summary
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.
