Case | HBS Case Collection | April 1996 (Revised March 1998)

Lex Service PLC-- Cost of Capital

by W. Carl Kester and Kendall Backstrand


Lex Service company has grown into a large multidivisional company with a substantial capital budget. In 1993, the board was reviewing its capital budgeting procedures. Specifically, it sought to determine the company's cost of capital and whether it should use different hurdle rates for different divisions.

Keywords: Risk and Uncertainty; Cost of Capital; Equity; Capital Budgeting;


Kester, W. Carl, and Kendall Backstrand. "Lex Service PLC-- Cost of Capital." Harvard Business School Case 296-003, April 1996. (Revised March 1998.)