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Risk, Capital Costs, and Project Financing Decisions

  • Book
  • © 1981

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Editors:
  1. Frans G. J. Derkinderen

    1. The Netherlands School of Business, The Netherlands

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    You can also search for this editor in PubMed   Google Scholar

  2. Roy L. Crum

    1. University of Florida, USA

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Part of the book series: Nijenrode Studies in Business (NSIB, volume 6)

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Table of contents (14 chapters)

  1. Front Matter

    Pages i-xiv
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  2. Risk Specification and Defensive Behavior

    1. Front Matter

      Pages 1-1
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    2. Behavioral Risk Constraints in Investment Analysis

      • O. Maurice Joy, F. Hutton Barron
      Pages 3-13

    3. Risk Preference: Empirical Evidence and Its Implications for Capital Budgeting

      • Roy L. Crum, Dan J. Laughhunn, John W. Payne
      Pages 14-36

    4. The Factor of Urgency in Corporate Capital Budgeting Decisions

      • George W. Hettenhouse
      Pages 37-53

    5. Geographic Perspectives of Risk: A Financial Strategic Approach

      • Frans G. J. Derkinderen
      Pages 54-76

  3. Estimating the Cost of Capital

    1. Front Matter

      Pages 77-77
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    2. Estimating the Market Risk Premium

      • Eugene F. Brigham, Dilip K. Shome
      Pages 79-106

    3. Growth Opportunities and Real Investment Decisions

      • J. E. Broyles, I. A. Cooper
      Pages 107-118

    4. A Multiperiod Cost of Capital Concept and its Impact on the Formulation of Financial Policy

      • A. I. Diepenhorst
      Pages 119-128

    5. Inefficient Capital Markets And Their Implications

      • John M. Samuels
      Pages 129-148

    6. An Investment Decision Model for Small Business

      • Ernest W. Walker
      Pages 149-163

  4. Financing the Investment of Capital

    1. Front Matter

      Pages 165-165
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    2. On Working Capital as an Investment by the Firm

      • Keith V. Smith
      Pages 167-185

    3. Capital Budgeting Proposals with Negative Salvage Values

      • Sandor Asztély
      Pages 186-203

    4. The Cost of Financing to the Firm in Foreign Exchange: Some Empirical Results and Implications

      • Harald Burmeister
      Pages 204-226

    5. Leasing: The Gulf between Theory and Practice

      • Cyril Tomkins, Julian Lowe, Eleanor Morgan
      Pages 227-253

    6. A Pragmatic Approach to the Estimation Problems Encountered In Lease-Purchase Analyses

      • John D. Martin, Paul F. Anderson, Chester L. Allen
      Pages 254-273

  5. Back Matter

    Pages 274-274
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Keywords

About this book

The ending of the decade of the seventies and the dawning of the eighties can be characterized as a period of great uncertainty with prospects for economic­ political instability. High inflation and fluctuating exchange rates in the de­ veloped Western world have served to strengthen the forces of disequilibrium in the fmancial markets, leading to an investment situation with several unusual but significant factors. Capital spending by business, leading to the creation of new jobs, has not been reduced substantially during this period of uncertainty, as happened in similar periods in the past. This is shown in part by the continuing low unemployment rates in evidence during the period, which are in contradic­ tion to the trend exhibited in similar past periods. The expanding financing re­ quirements resulting from high price inflation have led to an increase in the capital intensity of firms, and thus to enhanced sensitivity of their income streams to economic fluctuations. At the same time, the record high interest rates that companies have had to pay to acquire this inflated amount of capital have caused a deterioration in the safety or quality indica tors by which the creditworthiness of the firms is judged. These developments tend to increase vii viii INTRODUCTION the stakes involved in business decision making. One important repercussion of this is that greater attention is now being focused on improving the quality of investment decisions.

Editors and Affiliations

  • The Netherlands School of Business, The Netherlands

    Frans G. J. Derkinderen

  • University of Florida, USA

    Roy L. Crum

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