Problems in Using the Models

Eva R. Porras

Chapter 3 in The Cost of Capital, 2011, pp 94-130 from Palgrave Macmillan

Abstract: Abstract To value any type of investment including financial assets, projects or complete companies, you need to estimate the cost of the capital components of the proposed undertaking. However, to estimate the cost of capital of any type of project it is first necessary to develop a measure of risk, because the expected return from an investment depends on the risk of its cash flows. Thus, to arrive at the ‘desired’ return figure, the risk of the investment needs to be determined.

Keywords: Cash Flow; Risk Premium; Credit Default Swap; Default Risk; Market Portfolio (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-29767-8_4

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DOI: 10.1057/9780230297678_4

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