青岛农业大学经济与管理学院财务管理英文课件 chapter10.pptVIP

Required Return and the Cost of Capital Creation of value If the return on a project exceeds what the financial markets require, it is said to ear an excess return. This excess return, as we define it, represents the creation of value. Simply put, the project earns more than its economic keep. Finding and undertaking these value-creating projects increases a company’s common stock share price. Creation of Value Industry Attractiveness 1.Growth phase of product cycle 2.Barriers to competitive entry 3.Other protective devices---e.g patents, temporary monopoly power, oligopoly price Com