Systematic risk and assessment of investment projects profitability Cover Image

Системatски ризик и оцена рентабилности инвестиционих пројеката
Systematic risk and assessment of investment projects profitability

Author(s): Milorad Ivanišević
Subject(s): Business Economy / Management, Financial Markets, Accounting - Business Administration, Socio-Economic Research
Published by: Економски факултет Универзитета у Бањој Луци
Keywords: weighted аwerage cost of capital (WACC); capital asset princing model (CAPM); required rates of return; beta; debt; equity;

Summary/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 offering explanation for invested equity return correlation and systematic risk. Then 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.

  • Issue Year: 11/2013
  • Issue No: 18
  • Page Range: 105-116
  • Page Count: 12
  • Language: Serbian