Cost of capital, Financial Management

Assignment Help:

Q. Cost of capital?

The terms of cost of capital refers to the minimum rate of the return a firm must earn on its investment so that the market value of the company equity share fall. This is consonance with the overall object of the firm of wealth maximization. This is possible only when the firms earn the return on the project financed by the equity share holders at a rate which is least equal to the rate of the return expected by them . If a firms fail to earn the return at the expected rate the market value of the share would fall and thus result in reduction on overall wealth of the shareholders.

According to james : a cut off rate for the allocation of the capital to investment of the project . It is the rate of the return on a project that will leave unchanged the market price of the stock.

According to the Hampton: the rate of return of the firm require for the investment in order to increase the value of the firm in the market price.


Related Discussions:- Cost of capital

What are the benefits of collecting early and how it attempt, What are the ...

What are the benefits of "collecting early" and how do companies attempt to do this? A fund has time value.The sooner money is collected the better.  Companies utilize regional

Criticism of walter’s model, (i) No External Financing: - Walter' model pre...

(i) No External Financing: - Walter' model presume that the firm's investment are financed exclusively by retained earnings and no external financing is used. If it was therefore t

APPLICABILITY OF OPERATING CYCLE, #questioDiscuss the applicability of an o...

#questioDiscuss the applicability of an operating cycle in the vegetable growing business n..

Credit policy, What is the Credit Policy? Describe please.

What is the Credit Policy? Describe please.

Explain the term- trade receivable days, Explain the term- Trade receivable...

Explain the term- Trade receivable days (turnover) [Yearend trade receivables/Credit sales (or turnover)] x   365days It is the average length of time taken by customers t

Management of finacial institutions, what are the features of a comprehensi...

what are the features of a comprehensive interest rate risk management programme

Micro/Macro Question, You have been hired as an economic advisor to the Sou...

You have been hired as an economic advisor to the Southeastern Conference. As your first assignment they have asked you to identify three microeconomic and three macroeconomic issu

Effective annual rate, You are interested in saving money for your first ho...

You are interested in saving money for your first house. Your plan is to make regular deposits into brokerage account which will earn 14%. Your first deposit of $5,000 will be made

Valuation of shares , Example based on Valuation of Shares Share capit...

Example based on Valuation of Shares Share capital details & Types of Share Hatsun Agro private limited (HAPL) as on March 2008 had a total authorized share capital worth

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