Globalizing the Cost of Capital and Capital Budgeting at AES Case Solution

With power generation business worldwide, AES Corp. is looking for a method of calculating the cost of capital for its various activities and potential projects. In the past, AES uses the same cost of capital for all of its capital budget, but the international expansion of the company has raised questions about this approach and if a single cost of capital is so appropriate for different AES faces risks in different business environments. Recently, the company suffered heavy losses of currency devaluations in South America and regulatory changes in other countries. Group Manager Business Planning develops a methodology that takes into account the various countries and the risks of the project, and the case allows students to use this method to calculate the cost of capital for 15 different projects around the whole world. Students should consider how a global company can take into account the different risks in the evaluation of its international operations and invest abroad. For calculation sheets executable (tutorials), please contact our customer service at [email protected]
by
Mihir A. Desai,
Doug Schillinger
Source: HBS Premier Case Collection
23 pages.
Date Posted: December 12, 2003. Prod #: 204109-PDF-ENG
Globalizing the cost of capital and capital budgeting at AES settlement case

Globalizing the Cost of Capital and Capital Budgeting at AES Case Solution
Share This