Title: COFFEE BRAND PREFERENCE AND CONSUMER BEHAVIOR: AN INTEGRATED AHP-TOPSIS MULTI-CRITERIA DECISION ANALYSIS
Author:
Hasan Mohamed Husain Alaali
Abstract:
Introduction: The cost of capital is fundamental to corporate valuation, capital budgeting, financing decisions, and investment appraisal. Conventional approaches such as the Capital Asset Pricing Model (CAPM) and Weighted Average Cost of Capital (WACC) provide established foundations for estimating required returns, but their implementation may not explicitly represent additional firm-specific, market, country, and ESG-related conditions that affect financing environments.
Methods: This study develops the Alaali Cost of Capital Model (ACCM) through a conceptual model-development approach. ACCM retains conventional WACC as its baseline and introduces a Contextual Risk Adjustment (CRA) comprising firm-specific risk, incremental market-condition risk, country risk, and ESG-related risk. The model explicitly distinguishes contextual adjustments from risks already incorporated in conventional WACC inputs to limit double counting. A hypothetical numerical illustration demonstrates the model’s operational mechanics.
Results: The illustration shows how a baseline WACC can be systematically adjusted upward or downward according to explicitly identified contextual factors while preserving the contribution of each adjustment. ACCM therefore produces both a baseline capital-cost estimate and an interpretable contextual adjustment.
Discussion: ACCM is proposed as a transparent operational approach to context-adjusted cost-of-capital estimation rather than an empirically validated replacement for WACC or CAPM. Its adjustment coefficients require subsequent empirical calibration and testing.
Keywords: Cost of Capital; Weighted Average Cost of Capital (WACC); Contextual Risk Adjustment; Country Risk; ESG Risk; Firm-Specific Risk; Financial Modelling; Alaali Cost of Capital Model (ACCM).
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