Rrequired rate of return and cost of capital

Reference no: EM132516687 , Length: 1 page

Question 1. Why is NPV considered a superior method of evaluating the cash flows from a project? For a project the net present value is $15. What does this number explain?

Question 2. Differentiate between ‘required rate of return' and ‘cost of capital'?

Question 3. When we say the ‘cost of equity capital' or cost of equity of a firm is 15%, what does it mean? In other words, interpret the meaning of ‘15% cost of equity'.

The rate of return that investors require on their investment in the firm is 15%.

Question 4. What are some of the disadvantages of using the IRR method?

Reference no: EM132516687

Questions Cloud

What is the sales volume variance and reconcile : What is the sales volume variance and reconcile it with the production volume variance calculated in requirement2. What does each concept measure?

Constitutes an unacceptable infringement on autonomy : Select an advertisement that you think (unacceptably) infringes on the autonomy of consumers, explain the advertisment

Prepare entries that needed to reflect the transactions : Prepare the entries that would be needed to reflect the transactions and events in the district's government-wide statements

Knowledge was a function of perception : In Plato's "Simile of the Sun" passage from his work "Republic," Plato used the idea of light as a necessary requirement of knowledge

Rrequired rate of return and cost of capital : Why is NPV considered a superior method of evaluating the cash flows from a project? For a project the net present value is $15. What does this number explain

What is the analysis of all variable manufacturing overhead : What is the analysis of all variable manufacturing overhead ? What is the difference between planning and control of fixed and variable manufacturing overhead?

Sexual material for erotic purposes transgresses ethical : "Pornography is immoral, for the use of explicitly sexual material for erotic purposes transgresses ethical precepts." (Name the fallacy)

Compute the amount of annual deposits : Compute the amount of annual deposits that along with the initial deposit will bring the fund balance up to $250,000 at the maturity of the obligation

Should preston make or buy part : Should Preston make or buy part QX100? Preston Industries, Inc. currently manufactures part QX100. Monthly production costs for 10,000 units of QX100

User Account

All Pages