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Mann: Cost of Capital and UK Business Investment: Measurement Challenges and Research Opportunities
• Setting the stage: UK business investment has under-performed; so has productivity growth • Why central banks care: Cyclical demand and supply-side ‘speed limit’ Interest rates are central to investment theory • A new framework: Three actors and analytical perspectives – economic net present value, manager decision-making, and financial investor funding – influence the amount and type of business investment • Centrality of the cost of capital: Different measures of the cost of capital (internal funds, hurdle rate, WACC, ROIC) Time series evolution and relevance for business investment • Research ... (full story)