We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
The Cost of Capital.
- Authors
MAO, JAMES C. T.
- Abstract
The cost of capital plays a critical role in both the investment and financing decisions of a firm. In capital-budgeting decisions, the cost of capital serves as a measure of the profitability of investments. In financing decisions, the cost of capital is a crucial variable, since a firm's total value varies inversely with the overall cost of capital. Dr. Lewellen uses this broad concept of the cost of capital as the basis for his book, but, since the book is one of a series, Lewellen has chosen to focus his attention only on the interrelationships between capital structure, cost of capital, and the value of a firm. <br> Lewellen's presentation, which is basically theoretical, is almost entirely along the lines developed by Franco Modigliani and Merton H. Miller. Although a great deal of empirical research concerning the cost of capital is available, the author uses none of it to support his theoretical position. This is rather unfortunate since the cost of capital remains one of the most controversial subjects in the theory of finance. The book, however, does contain a number of numerical examples which serve to illustrate and elucidate the theoretical discussions.
- Subjects
COST of Capital, The (Book); LEWELLEN, Wilbur G.; CAPITAL costs; NONFICTION
- Publication
Journal of Finance (Wiley-Blackwell), 1969, Vol 24, Issue 5, p996
- ISSN
0022-1082
- Publication type
Book Review
- DOI
10.2307/2325712