The Impact of CSR/ESG on the Cost of Capital:  A Case Study of US Companies

This case illustrates how the Gordon Growth Model is employed to estimate the value of a firm’s stock. The model determines the value of stock based on dividends, growth rate, and the cost of capital. The Capital Asset Pricing Model (CAPM) is employed to calculate the cost of capital. Both economic analysis and ratio analysis are used to examine the impact of external and internal factors on share worth. The case discusses why the market share price may vary from an estimation of its worth. This case study can be used in an Introduction to Investments course, an Advanced Investments course, or a first level MBA graduate course.

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The Financial Structure of Small and Medium Firms and the Impact on the Cost of Capital

Estimating SMEs Cost of Equity Using a Value at Risk Approach ◽

10.1057/9781137389305.0007 ◽

2014 ◽

Keyword(s):

Cost Of Capital ◽

Financial Structure ◽

The Cost ◽

The Impact ◽

Medium Firms

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Minimizing the Cost of Capital in Hotel Investments

Handbook of Research on Holistic Optimization Techniques in the Hospitality, Tourism, and Travel Industry - Advances in Hospitality, Tourism, and the Services Industry ◽

10.4018/978-1-5225-1054-3.ch008 ◽

2017 ◽

pp. 191-207

Author(s):

Prashant Das ◽

Gabrielle Bodenmann

Keyword(s):

Cost Of Capital ◽

Optimization Process ◽

Hypothetical Case ◽

Funding Sources ◽

Investment Manager ◽

The Cost

In this book chapter, we introduce the readers to typical sources of hotel financing using a hypothetical case-study. First, we provide a commentary on various types of funding sources. We provide rationale for why a particular surplus unit specifies certain constraints to an (investment) manager. A discussion is offered on various factors that may lead to a certain mix of financing. We walk the readers through various steps of the optimization process. Finally, we provide a case study on optimizing the funding sources using the SOLVER function in MS Excel.

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The Determinants of the Cost of Capital: Case Study Evidence

Emerging Markets and Financial Globalization ◽

10.1093/0199272697.003.0003 ◽

2006 ◽

pp. 46-58

Author(s):

Paolo Mauro ◽

Nathan Sussman ◽

Yishay Yafeh

Keyword(s):

Cost Of Capital ◽

Capital Case ◽

The Cost

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Sustainable Residential Building Considerations for Rural Areas: A Case Study

Land ◽

10.3390/land9050152 ◽

2020 ◽

Vol 9 (5) ◽

pp. 152

Author(s):

Lawrence Fulton ◽

Bradley Beauvais ◽

Matthew Brooks ◽

Scott Kruse ◽

Kimberly Lee

Keyword(s):

Land Use ◽

Rural Areas ◽

Return On Investment ◽

Cost Of Capital ◽

Sustainable Construction ◽

Solar Array ◽

Sustainable Solutions ◽

Electric Car ◽

The Impact

Intelligent use of rural residential land and sustainable construction is inexorably linked to cost; however, options exist that are eco-friendly and have a positive return on investment. In 2011, a research residence was built to evaluate various land-use and sustainable components. This Texas house has subsequently been used for both residential and research purposes. The purpose of this case study was to evaluate break-even construction considerations, to assess environmental impacts, and to evaluate qualitatively efficacy of sustainable options incorporated in the research residence. Some of the specific components discussed are home site placement (directional positioning); materiel acquisition (transportation); wood product minimization; rainwater harvesting; wastewater management; grid-tied solar array power; electric car charging via a solar array; geothermal heating and cooling; insulation selection; windows, fixtures, and appliance selection; and on-demand electric water heaters for guest areas. This study seeks to identify the impact of proper land use and sustainable techniques on the environment and return-on-investment in rural areas. Break-even and 15-year Net Present Value (NPV) analysis at 3% and 5% cost of capital were used to evaluate traditional construction, partially sustainable construction, and fully sustainable construction options for the case study house, which was built sustainably. The additional cost of sustainable construction is estimated at $54,329. At 3%, the analysis suggests a 15-year NPV of $334,355 (traditional) versus $250,339 million (sustainable) for a difference of $84K. At 5% cost of capital, that difference falls to $63K. The total estimated annual difference in carbon emissions is 4.326 million g/CO2e for this research residence. The results indicate that good choices for quick return-on-investment in rural construction would be the use of engineered lumber, Icynene foam, and Energy Star windows and doors. Medium-term options include photovoltaic systems (PVS) capable of powering the home and an electric car. Sustainable construction options should positively affect the environment and the pocketbook. Regulations and code should require adoption of short-range, break-even sustainable solutions in residential construction.

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Estimating the Impact of Medical Innovation: A Case Study of HIV Antiretroviral Treatments

Forum for Health Economics & Policy ◽

10.2202/1558-9544.1102 ◽

2008 ◽

Vol 11 (2) ◽

Cited By ~ 9

Author(s):

Mark G Duggan ◽

William N Evans

Keyword(s):

Health Care ◽

Good Alternative ◽

Care Utilization ◽

Short Term ◽

Fda Approval ◽

New Treatments ◽

The Cost ◽

The Impact ◽

Average Health

As health care consumes a growing share of GDP, the demand for better evidence regarding the effects of health care treatments and how these vary across individuals is increasing. Estimating this with observational data is difficult given the endogeneity of treatment decisions. But because the random assignment clinical trials (RACTs) used in the FDA approval process only estimate average health effects and do not consider spending, there is no good alternative. In this study we use administrative data from California's Medicaid program to estimate the impact of HIV antiretroviral treatments (ARVs). We use data on health care utilization to proxy for health status and exploit the rapid takeup of ARVs following their FDA approval. Our estimate of a 68 percent average mortality rate reduction is in line with the results from RACTs. We also find that the ARVs lowered short-term health care spending by reducing expenditures on other categories of medical care. Combining these two effects we estimate the cost per life year saved at $19,000. Our results suggest an alternative method for estimating the real-world effects of new treatments that is especially well-suited to those treatments that diffuse rapidly following their approval.

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Does environmental information disclosure affect the performance of energy-intensive firms’ borrowing ability? Evidence from China

Energy & Environment ◽

10.1177/0958305x18757766 ◽

2018 ◽

Vol 29 (5) ◽

pp. 685-705 ◽

Cited By ~ 3

Author(s):

Haiqing Hu ◽

Chun-Ping Chang ◽

Minyi Dong ◽

Wei-Na Meng ◽

Yu Hao

Keyword(s):

Capital Market ◽

Information Disclosure ◽

Cost Of Capital ◽

Environmental Information ◽

Influential Factors ◽

Environmental Information Disclosure ◽

Loan Size ◽

The Cost ◽

The Impact ◽

Positive Effect

In recent years, a growing strand of China’s listed companies chose to disclose environmental information, which may potentially affect their financial performance then further influence its performance of financial supports. To quantitatively investigate the impact of enterprise’s environmental information disclosure on the ability of firms’ borrowing in China, this paper divides the measurements of information disclosure into five categories and evaluates firms’ performance in capital market through its availability of a loan and the cost of capital. In total, 97 listed energy-intensive companies in China are selected and their data covering the period of 2000–2014 are utilized for empirical study. The empirical results indicate that enterprise’s environmental information disclosure appears to have a significantly positive effect on the loan size available, while the cost of capital is less sensitive to environmental information disclosure. The empirical evidence also suggests that, among the five aspects of information disclosure measurements, the future plan and monetary information are the most influential factors of the cost of capital.

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