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Examine the difference between Explicit Cost and Implicit Cost
Cost of capital can be either implicit cost or explicit. Explicit cost of any source of capital is the discount rate which equates the present value of cash inflows that are incremental to taking of the financing opportunity with present value of its incremental cash outlay. Hence the explicit cost of capital is the internal rate of return of cash flows of financing opportunity.
A series of each flows are associated with a method of financing. At the instance of acquisition of capital, cash inflow takes place followed by the subsequent cash outflows in the form, of interest payment, payment of dividends orrepayment of principal money. Hence, if a company issues 10 per cent perpetual debentures worth USD 10,00,000, there would be cash inflow to firm of the order of 10,00,00. This will be followed by annual cash outflow of USD. 1,00,000. The rate of discount which equates the present value of cash inflows with present value of cash outflows, would be explicit cost of capital.
Parity Conditions A parity condition defines the relative value of one country's currency to the other country's currency. The condition states how, for the example, difference
Concept and measurement of the cost of capital The evaluation of the worth of a long-term project suggests a certain norm or standard against which benefits are to be judged. R
Drug companies are not forced to divulge all studies they performed to the FDA. Suppose a drug company knows that the drug has no effect and followed the strategy described in (b1)
Explain the purchasing power parity, both of the absolute and relative versions. What causes the deviations from the purchasing power parity? Answer: The absolute version of p
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Develop and implement strategic plan using bounce fitness as case study
Evaluation of change in credit policy Current average collection period = 30 + 10 = 40 days Current accounts receivable = 6m × 40/ 365 = $657534 The Average collection pe
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