Describe the term cost of capital
Briefly describe the term cost of capital and also illustrate out its significance?
Expert
Cost of the capital is the rate of return that is minimum that has to be earned on investments in order to assure the investors of different types who are making investments in the company from debentures, shares and loans. It is employed in financial investment that refers to the cost of a company's funds or the shareholders return on the company's accessible deals. It is the necessary rate that a company should attain to cover the cost of generating funds in the market. Through seeing this only the investor invests the money in the company if the company is giving the necessary rate of return. It is a guideline to evaluate the profitability of various investments. The significance of cost of capital is that it is employed to measure new project of company and permits the computations to be simple so that it has least return that investor expect for providing investment to the company. It has such significance in financial decision making. It really employed in managerial decision making in certain field like- i) Decision on capital budgeting - It is employed to evaluate the investment proposal to select a project that satisfies return on investment. ii) Employed in designing corporate financial structure - it is use employed to plan the market changeability and try to accomplish the economical capital structure for firm. iii) Top management performance - It calculates the financial presentation of top executives. It engages the comparison of real profit of the projects and taken projects entire cost.
When given resources can now produce additional goods than was previously probable, then there have been a: (1) Stock market boom. (2) Competitive spurt which shrinks entrepreneurial gain. (3) Concavity reversal in the production possibilities frontier. (4) Bigger rel
Question: In Vancouver the Salvation Army encourages people to make food voucher donations to panhandlers instead of simply giving them cash. You can buy a food voucher for $5 and give it to a panhandler who can use it to purchase food. The Sa
What problem does barter entail?
After agonizing regarding whether to buy a hot dog or a hamburger along with his last dollar while he goes to the fair, Jeeter at last chooses the hot dog. The hamburger shows Jeeter's: (i) normative choice, because it would be more nutritious. (ii) opportunity cost o
How can we calculate Price earnings ratio?
“Natural price” by Adam Smith of a good was eventually determined through: (1) the amount of capital used within production in the short run. (2) long-run average costs of production, that Adam Smith believed to be the amo
Elucidate Reliance on technology and capital goods of the market system?
Describe four important areas to emphasize Expenditures?
The utilitarianism of Jeremy Bentham would clash most strongly along with the philosophic principles of: (w) the epicureans who followed the teachings of Epicurus [c. 341 to 271 BC]. (x) hedonism. (y) the Greek philosophers and mediev
Explain how government might manipulate its expenditures and tax revenues to reduce unemployment?
18,76,764
1941973 Asked
3,689
Active Tutors
1440720
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!