Cost of Capital in the Foundations of Financial Management

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  In 2010, Apple was facing a number of challenges. The company was struggling to compete with Android devices, and its stock price was declining. In response, Apple CEO Tim Cook implemented a new capital allocation strategy. Cook's strategy focused on returning cash to shareholders through dividends and share repurchases. The company also invested heavily in research and development, and it acquired a number of new businesses. As a result of Cook's capital allocation strategy, Apple's stock price rebounded, and the company became one of the most valuable companies in the world. Here is an article on capital allocation that I found in the University of Arizona Global Campus Library:

• Capital Allocation: A Review of the Literature
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  Capital Allocation: A Review of the Literature article

This article provides a comprehensive review of the literature on capital allocation. The article discusses the different factors that companies consider when allocating capital, and it reviews the different methods that companies use to allocate capital. The article also discusses the importance of capital allocation for corporate performance. The article concludes by providing some recommendations for companies that are looking to improve their capital allocation process. I found this article to be very informative. It provides a good overview of the capital allocation process, and it discusses the different factors that companies should consider when allocating capital. I would recommend this article to anyone who is interested in learning more about capital allocation. Here are some other real-world examples of how capital allocation has been applied, both successfully and unsuccessfully:

• Successfully:
  • Berkshire Hathaway: Warren Buffett is famous for his successful capital allocation skills. He has consistently allocated capital to businesses that he believes are undervalued, and he has generated tremendous returns for his investors.
  • Amazon: Jeff Bezos has also been very successful at allocating capital. He has invested heavily in new businesses, such as Amazon Web Services, and he has helped to make Amazon one of the most successful companies in the world.
• Unsuccessfully:
  • Enron: Enron was a company that was very successful in the late 1990s. However, the company's capital allocation process was flawed. Enron invested heavily in risky businesses, and it used accounting tricks to inflate its profits. The company eventually collapsed, and many investors lost their money.
  • Lehman Brothers: Lehman Brothers was a major investment bank that collapsed in 2008. The company's capital allocation process was also flawed. Lehman Brothers invested heavily in risky mortgage-backed securities, and it did not have enough capital to cover its losses when the housing market collapsed.

Capital allocation is a complex process, and there is no one-size-fits-all approach. However, the examples above show that it is possible to be successful if you have a sound capital allocation process.

Sample Solution

  In 2010, Apple was facing a number of challenges. The company was struggling to compete with Android devices, and its stock price was declining. In response, Apple CEO Tim Cook implemented a new capital allocation strategy.