Systematic risk and assessment of investment projects profitability

Authors

  • Милорад Иванишевић Faculty of Economics, University of Belgrade

DOI:

https://doi.org/10.7251/ACE1318105I

Keywords:

weighted аwerage cost of capital (WACC), capital asset princing model (CAPM), required rates of return, beta, debt, equity

Abstract

In the article is, first of all, considered weighted average cost of capital (WACC) as criteria for estimation profitability of investments. Afterwards, it is considered the Capital Asset Princing Model o?ering explanation for invested equity return correlation and systematic risk. Ten it is analyzed connection between these two models in regard to direct connection of required rates of return on debt and equity with their beta coefficients. It is also stated that required rates of return affirmed by usage of the Capital Asset Princing Model can, under certain conditions, be used as criteria for estimation profitability of investments.

Downloads

Download data is not yet available.

References

Brealey, R. A., Myres, S. C. and Marcus, A. J. Основи корпоративних финанција. Загреб: МАТЕ, 2007.

Gitman, L. J. Managerial Finance. Boston: Addison-Wesley, 2003.

Horne, J. C. V. and Wachowicz, J. M., Jr. Основе финансијског менаџмента. Београд: Дата Статус, 2007.

Иванишевић, М. Пословне финансије. Београд: Економски факултет, 2012.

Kaen, F. R. Corporate Finance. Cambridge: Blackwell, 1995.

Kolb, R. W. Financial Management. Glenview: Scot Foresman and Company, 1987.

Samuels, J. M., Wilkes, F. M. and Brayshow, R. E. Management of Company Finance. London: Chapman and Hill, 1991.

Smart, S. B., Megisson, W. L. and Gitman, L. J. Corporate Finance. SouthWestern: Tomson, 2007.

Станчић, П. Савремено управљање финансијама предузећа. Крагујевац: Економски факултет, 2006.

Downloads

Published

2013-02-28

How to Cite

Иванишевић, М. (2013). Systematic risk and assessment of investment projects profitability. Acta Economica, 11(18), 105–116. https://doi.org/10.7251/ACE1318105I

Issue

Section

Preliminary Communication