ABSTRACT
An understanding of corporate value is impossible without addressing the issues of perceived risk and required return. We examine the relationship between these factors; note that different stakeholders may have different risk perceptions; and define ‘value’ as relating to returns generated in excess of the required return. This latter point means that value is only created by investments generating a positive net present value. Following from this, three metrics of value calculation are introduced; two relating to ‘internal’ value of the business, and one which shows value to the investor.
