search query: @indexterm CAPITAL COSTS / total: 211
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| Author: | Clubb, C. D. B. |
| Title: | A pedagogic note on the weighted average cost of capital and project valuation. |
| Journal: | Journal of Business Finance and Accounting
1992 : APR, VOL. 19:3, p. 465-467 |
| Index terms: | CORPORATE FINANCE CAPITAL COSTS CAPITAL INVESTMENT DECISION MAKING |
| Language: | eng |
| Abstract: | The article argues that the assumptions implicit in the use of the after-tax weighted average cost of capital for project valuation (Miles and Ezzell, 1980) have not been fully addressed in major textbooks and it therefore provides a simple derivation of the Miles-Ezzell result in order to help remedy this situation. The paper also provides the necessary valuation background for deriving the beta degearing formula for the case of a constant leverage ratio if the CAPM is assumed to hold. |
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