Classification of the cost, Financial Management

Assignment Help:

1) Future cost and historical cost: financial decision is based on the future cost and not on the historical cost. The decision related to the future and hence the cost are likely to be incurred in furthered costs.

2) Specific cost and composite costs: the cost of individual source of the capital of all the sources combined in the terms as composite cost or overall cost. It is thus the weighted cost thus. the cost of debenture and preference shares equity shares and retained earnings is to be secretly calculated first and then combined cost can be computed since the combined cost consider the quantum of the financing through each cost the cost is known as the weighted cost. It is this overall which is the important in the evaluating of a firm as on ongoing entity. The composite cost of capital is the cost which is to be considering while the evaluating capital project also. In case only one source of financing is to be used for the investment proposal the specific cost of that source of that funds may be consider but in a capital structure decision, it is always the weighted cost of capital that is significant.


Related Discussions:- Classification of the cost

Decentralization, Decentralization This is a company power structure i...

Decentralization This is a company power structure in which authority and decision-making responsibility are diffused throughout various stages of an organization. Decentraliz

Function of the investment decision, Q. Function of the Investment decision...

Q. Function of the Investment decision? Investment decision related of the selection of the fixed assets. the assets can be acquired fall into two board groups i) long terms

Investment decision and cost of capital, INVESTMENT DECISION AND COST OF CA...

INVESTMENT DECISION AND COST OF CAPITAL In Finance, investment decision is disclose the allocation of funds in fixed assets or long term. This decision is also known as capita

#WALTOR''S MODEL., CAPITALISATION RATE=0.01 EARNINGS PER SHARE(E)=10 ASSUME...

CAPITALISATION RATE=0.01 EARNINGS PER SHARE(E)=10 ASSUME RATE OF RETURNS ON INVESTMENTS (R):15

What does it mean if this value were zero, What does it mean when we say th...

What does it mean when we say that the correlation coefficient for two variables is -1? What does it mean if this value were zero? What does it mean if it were +1? Correlation

Parties to mutual fund trust, Parties to Mutual Fund Trust As is common...

Parties to Mutual Fund Trust As is common to any trust covered under the Indian Trust Act, the parties involved in a mutual fund trust are the sponsor or settler, the trustees,

Investable capital market portfolio, The Total Investable Capital Market Po...

The Total Investable Capital Market Portfolio According to a report prepared by McKinsey in January 2007, World financial assets including bonds, stocks, corporate debt securit

Operating cycle, Using the operation cycle and any other financial manageme...

Using the operation cycle and any other financial management knowlegde, discuss the applicability of such cycle to poultry business in uganda( consider broilers)

PROFIT MAXIMIZATION, what are the arguments in favour of profit maximizat...

what are the arguments in favour of profit maximization?

Write Your Message!

Captcha
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