Nominal cost of debt or the effective annual cost

Assignment Help Finance Basics
Reference no: EM132412400

Can you explain this sentence by using financial knowledge, In financial management, the cost of capital is used primarily to make decisions that involve raising new capital. The most relevant component costs are today's marginal costs rather than historical costs. Should you use the nominal cost of debt or the effective annual cost?

Reference no: EM132412400

Questions Cloud

What is simmons return on levered equity : The tax rate on corporate earnings is 32%. What is Simmons' return on levered equity after the debt issuance?
Adequate compensation for investment : You are considering the purchase of Crown Bakery, Inc. common stock that just paid a dividend of $19.59 per share. You expect the dividend to grow
Determining the ll after-tax cost of debt : LL believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 35%, what is LL's after-tax cost of debt
What are the limits of patient confidentiality : What are the limits of patient confidentiality? Do you recognize situations in which a duty to warn or otherwise protect third parties might exist?
Nominal cost of debt or the effective annual cost : The most relevant component costs are today's marginal costs rather than historical costs. Should you use the nominal cost of debt or the effective annual cost?
Explain how systems theory can help administrators : Explain how systems theory can help administrators understand the relationships between human services organizations and their environments.
What will be the firm quick ratio after nelson : What will be the firm's quick ratio after Nelson has raised the maximum amount of short-term funds?
How women fought for equality and control : What ways did the goals of feminism of the 1960s and 1970s impact women's lives, including the American workplace, military and education opportunities
What is the project mirr : What is the project's MIRR? Do not round intermediate calculations. Round your answer to two decimal places.

Reviews

Write a Review

Finance Basics Questions & Answers

  Purchase of new equipment

ABC, Inc is planning the purchase of new equipment that costs $123,158. The project is expected to last for 11 years. Each year, the new project

  What is the justification for the irs position

When does the IRS consider a transaction to be non-taxable to the target firm's shareholders? What is the justification for the IRS' position?

  What is the volatility standard deviation of an equally

What is the volatility (standard deviation) of an equally weighted portfolio of stocks within an industry in which the stocks have a volatility of 50% and a correlation of 40% as the portfolio becomes arbitrarily large?

  What if the annual traffic rate increases at 8prcnt annually

Jeff has estimated that traffic will increase annually at 5%. How long will the current bridge system work before a new bracing system is required? What if the annual traffic rate increases at 8% annually? At what traffic increase rate will the curre..

  What is the value of the yen in fijian dollars

What is the value of the yen in Fijian dollars (i.e., how many Fijian dollars do you need to buy a yen)?

  What are the common stockholders residual claims to earnings

Diploma Mills has $30 million in earnings, pays $4.25 million in interest to bondholders, and $2.95 million in dividends to preferred stockholders.

  How many new retail outlets would be necessary to break

A final suggestion is a make a 10% across-the-board price reduction. By how much would dollar sales have to increase to maintain Alliance's current contribution.

  What is the power of the test

a. What is the power of the test if the medication has a 5-point effect? b. What is the power of the test if the medication has a 10-point effect?

  What is the stock expected price 5 years from now

What is the stock's expected price 5 years from now? Choose one answer. A. $44.46 B. $41.20 C. $42.26 D. $40.17What is the stock's expected price 5 years from now? Choose one answer. A. $44.46 B. $41.20 C. $42.26 D. $40.17

  What is the true initial cost figure southern

What is the true initial cost figure Southern should use when evaluating its project?

  Rates even though borrowing demand has been high

Why has the U.S. not seen increases in interest rates even though borrowing demand has been high?

  Global investment banking process

How the global investment banking process has assisted the organization in how they do business overseas.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd