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Risk, Capital Costs, and Project Financing Decisions

  • Frans G. J. Derkinderen
  • Roy L. Crum

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

Table of contents

  1. Front Matter
    Pages i-xiv
  2. Risk Specification and Defensive Behavior

    1. Front Matter
      Pages 1-1
    2. O. Maurice Joy, F. Hutton Barron
      Pages 3-13
    3. Roy L. Crum, Dan J. Laughhunn, John W. Payne
      Pages 14-36
  3. Estimating the Cost of Capital

    1. Front Matter
      Pages 77-77
    2. Eugene F. Brigham, Dilip K. Shome
      Pages 79-106
    3. J. E. Broyles, I. A. Cooper
      Pages 107-118
    4. Ernest W. Walker
      Pages 149-163
  4. Financing the Investment of Capital

    1. Front Matter
      Pages 165-165
    2. Cyril Tomkins, Julian Lowe, Eleanor Morgan
      Pages 227-253
    3. John D. Martin, Paul F. Anderson, Chester L. Allen
      Pages 254-273
  5. Back Matter
    Pages 274-274

About this book

Introduction

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.

Keywords

Investment growth leasing unemployment

Editors and affiliations

  • Frans G. J. Derkinderen
    • 1
  • Roy L. Crum
    • 2
  1. 1.The Netherlands School of BusinessThe Netherlands
  2. 2.University of FloridaUSA

Bibliographic information

  • DOI https://doi.org/10.1007/978-94-009-8129-4
  • Copyright Information Springer Science+Business Media B.V. 1981
  • Publisher Name Springer, Dordrecht
  • eBook Packages Springer Book Archive
  • Print ISBN 978-94-009-8131-7
  • Online ISBN 978-94-009-8129-4
  • Series Print ISSN 0924-4980
  • Buy this book on publisher's site