Capital Investments and Capital Allocation

Free CFA Level I lesson in Corporate Issuers. 15 min read, ~2,188 words.

Four investment types: going concern (maintenance), regulatory/compliance, expansion of existing business, and new lines of business, climbing in risk and required return. NPV rule: accept if NPV 0. IRR rule: accept if IRR required return. ROIC rule: value created if ROIC WACC, where ROIC is NOPAT over invested capital. When...