Ministry Of Finance
In a preceding post I discussed why the price of debt has little influence on investments. What about the cost of equity? Firms usually use (considerably) far more equity than debt to finance their investments. So the cost of equity need to matter more. In a recent study , Murray Frank and Tao Shen investigate how the price of equity and the weighted average expense of capital (WACC) influence investments of US firms. Remarkably, they locate that the cost of equity and the WACC are positively connected to corporate investments. Firms with a higher estimated cost of equity and WACC tend to invest substantially much more. That is a very strange result. We would count on firms with a higher price of capital to invest much less, not more.
Somewhere along the way, Yahoo stepped into a blockbuster of great fortune from having invested in Alibaba, the huge Chinese firm …
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Throughout the fall semester 2013 at Georgian Court University in Lakewood, NJ we have six teams competing in the Capstone (Capsim) simulation. There are four students on every single of the following businesses/teams: Andrews, Baldwin, Chester and Digby. The computer has two simulation organizations/teams Erie and Ferris. The simulation begins with 4 standard modules: study and development, advertising and marketing, production and finance. We add human sources in the second round and total quality management in the fourth round. The competition is seven rounds starting Saturday October 27, 2013 through Saturday December 8, 2013. On Saturday December 15, 2013 each firm will make a power point presentation that contains the organization mission statement, corporate vision, segment evaluation, round analysis and economic statistical evaluation compared to the other companies. Segment evaluation describes company products in the standard, low-end, higher finish, performance and size segments.