Define the explicit cost of capital, Financial Management

Assignment Help:

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.


Related Discussions:- Define the explicit cost of capital

Explain implications of deviations - purchasing power parity, Explain the i...

Explain the implications of the deviations from the purchasing power parity for countries’ competitive positions in the world market. Answer:  If exchange rate changes satisfy pu

Equity method of accounting, Q. Equity Method of Accounting? Equity Met...

Q. Equity Method of Accounting? Equity Method of Accounting - Investors cost basis is adjusted up or down (according to the % of stock ownership) as investee's retained earning

Uses of index numbers, Uses of Index Numbers 1. Establishes trends ...

Uses of Index Numbers 1. Establishes trends Index numbers when analyzed reveal a general trend of the phenomenon under study. The available figures for inflation based

What is traded investments, Traded investments The term traded investme...

Traded investments The term traded investment refers to the buy of an investment asset which is traded in the financial markets. Instance includes government and ordinary share

Investment of surplus cash, I need a report on the topic Investment of Surp...

I need a report on the topic Investment of Surplus Cash. Can you please assist me for Investment of Surplus Cash report for about 2000 words?

Determine the expected return and risk of investing, Question: The stoc...

Question: The stock of Bax Limited performs relatively well to other stocks during recessionary periods. The stock of Pax Limited, on the other hand, does well during growth

Major linen purchase on open account, that the business has far fewer linen...

that the business has far fewer linens than it needs, so he makes a major linen purchase on open account. Which of the following terms refers to the fact that partners Ma and Runni

Show the benefits of jit, Q. Show the benefits of JIT? Additionally to ...

Q. Show the benefits of JIT? Additionally to a higher price and quicker settlement by its major customer such a JIT agreement offers several benefits to the supplier of goods.

Current scenario of hedge fund industry, Global Scenario The Hedge Fund...

Global Scenario The Hedge Fund industry has captured over US $ 2 trillion in assets globally by the end of year 2006. According to an investor survey revealed for the Hedge Fun

Constructing index numbers, Constructing Index Numbers There are two a...

Constructing Index Numbers There are two approaches for constructing an index number namely the aggregates method and average of relatives method. The index constructed in eit

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