The cost of capital is in part based upon risk

Assignment Help Financial Management
Reference no: EM131300079

We know that the cost of capital is in part based upon risk. The riskier the investment, the higher the cost of the capital. Entrepreneurs are often flabbergasted at the return investors expect. Most entrepreneurs see their businesses as "low risk" or "sure to succeed" businesses. Discuss three risk factors inherent in an entrepreneurial venture and how those risk factors could affect the success of the business.

Reference no: EM131300079

Questions Cloud

Annual interest with two repayment options : You are given the opportunity to borrow $10,000 for 36 months at 12% ANNUAL interest with two repayment options: Pay interest only (no principal) at the end of each month with full repayment of principal (the amount borrowed) at the end of the 36 mon..
What is the company break-even point : A company has a cost of goods of 60% of the selling price of its products. It has $200,000 in fixed overhead for administrative expenses, rent and salaries. In addition, it spends 18% of every sales dollar on marketing. What is the company’s break-ev..
Aftertax cost of debt and yield on new issue : Airborne Airlines Inc. has a $1,000 par value bond outstanding with 20 years to maturity. The bond carries an annual interest payment of $116 and is currently selling for $820. Airborne is in a 20 percent tax bracket. Compute the yield to maturity on..
The cost of capital is in part based upon risk : We know that the cost of capital is in part based upon risk. The riskier the investment, the higher the cost of the capital. Entrepreneurs are often flabbergasted at the return investors expect. Most entrepreneurs see their businesses as "low risk" o..
The basis of future worth comparison at an interest rate : An industrial engineer is considering two robots for purchase by a fiber-optic manufacturing company. Robot A will have a first cost of $90,000, an annual maintenance and operation cost of $35,000, and a $45.000 salvage value. Which should be selecte..
Quoted as units of foreign currency per dollar : Which one of these statements is correct assuming exchange rates are quoted as units of foreign currency per dollar?
The bonds make semiannual payments- what is the ytm : Heginbotham Corp. issued 15-year bonds two years ago at a coupon rate of 7.9 percent. The bonds make semiannual payments. If these bonds currently sell for 109 percent of par value, what is the YTM?
What is the current price of the bond : XYZ Corporation issued a 30 year, 7% annual coupon bond five years ago. The current yield to maturity of bonds with similar risk is 6% annually. Assume that the bond was issued at par value ($1,000). What is the current price of the bond? Is it tradi..

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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