Cost of Capital for Small Size Tourism Industry in Developing Countries: The Case of Lodging Sector in Chile

Sergio Zuniga-Jara & Karla Soria Barreto
This paper provides a simplified approach toward estimating the cost of capital for a small company of the tourism sector. This is accomplished by dividing the hurdle rate into the return of the specific industry in a specific country, and a specific risk premium dependent on the size and age of the company/projects. We illustrate our proposal with investment estimations in lodging accommodations along the northern coast of Chile where tourism represents an important source...
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