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Define the Explicit cost of capital
Explicit cost of retained earnings that involve no future flows to or from firm is minus 100 per cent. This must not tempt one to infer that retained earnings is cost free. As we will discuss in subsequent paragraphs, retained earnings do cost the firm. Cost of retained earnings is the opportunity cost of earning on investment elsewhere or in company itself. Opportunity cost is technically called as implicit cost of capital. It is the rate of return on other investments available to firm or shareholders in addition to that currently being considered.
Financial Ratios: Another method of measuring and monitoring performance is through the use of financial ratios and other comparative tools. Financial ratios use information
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Lehman Brothers Holdings was a global financial services firm which, until declaring bankruptcy in 2008, participated in business in investment banking, equity and fixedincome sale
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How does a preemptive right protect the interests of existing stockholders? A preemptive right defends the interests of existing stockholders by providing them the opportunity to
Banks and brokerage firms are measured financial centers
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Problem: i) Assume a firm buys a new tooling machine for Rs 2000,000, installation costs net of taxes are Rs 300,000. An existing asset has a book value of Rs 400,000 and the
Why do total assets equal the sum of total liabilities and equity? Explain. Assets = Liabilities + Equity Assets are the items of value that a business owns. Liabilities ar
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