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.
Opportunity costs, which are the values of the: (i) monetary costs of goods and services. (ii) best alternatives sacrificed while choices are made. (iii) minimal budgets of families upon welfare. (iv) hidden charges passed upon to consumers. (v) exorb
Question The Current Account captures international fund flows due to net income on (past) investments, net transfers, and i._______________________________, general
I am facing difficulty in this question. Help me in find out correct answer of this economy based question. From heterodox perspective, why do business enterprises choose administered prices as opposed to highly flexible prices?
Question: Was the stimulus package passed in 2009 as success? In answering this question the focus should be the articles on the syllabus, but you should also include opinions of other commentators. Your answer should also describe w
Suppose that, based on a nation’s production possibilities curve, for 10,000 pizzas domestically an economy must sacrifice to get the one additional industrial robot it desires, but can get that robot from another country in exchange for 9,000 pizzas. To the fol
Adam Smith wrote his Wealth of Nations within part like a refutation of the doctrines: (1) classical liberalism. (2) utilitarianism. (3) mercantilism. (4) physiocracy. (5) laissez faire capitalism.
Assume that you bought a ton of gold in Santiago, and Chile for $450 per ounce and immediately sold all of this in Antwerp, Belgium for $480 per ounce. Therefore economists would categorize your movement as: (i) arbitrage. (ii) scalping. (iii) screening. (iv) speculat
In heterodox economics, what implications does technical change and vintage technology contain for the cost structure of the business enterprise?
Explain: “Goods and services are scarce because resources are scarce.” Analyze: “It is the nature of all economic problems that absolute solutions are denied us.”
Explain the statement: “Good economic policy requires good economic theory.”?
18,76,764
1945084 Asked
3,689
Active Tutors
1453275
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!