Gabriel, thanks for your comment. On IRR, there's another reason why firms are reluctant to make use of all cheap capital and that is a lower discount rate implies that they can and should undertake riskier projects - with a higher chance of failure - but no one wants to associate themselves with failure.
My old company had this issue. ROA was so high we couldn’t get them to invest in anything new. But irr for new investments was pretty low. They just ended up consolidating more and more. Think this piece makes strong case for monopoly power though. Remember building a moat is the five key aspects of company, which is like high barrier to entry but also indicative of monopoly pricing. https://t.co/T0H6K98TgJ
Gabriel, thanks for your comment. On IRR, there's another reason why firms are reluctant to make use of all cheap capital and that is a lower discount rate implies that they can and should undertake riskier projects - with a higher chance of failure - but no one wants to associate themselves with failure.
My old company had this issue. ROA was so high we couldn’t get them to invest in anything new. But irr for new investments was pretty low. They just ended up consolidating more and more. Think this piece makes strong case for monopoly power though. Remember building a moat is the five key aspects of company, which is like high barrier to entry but also indicative of monopoly pricing. https://t.co/T0H6K98TgJ