Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Q. Importance of the cost of capital?
1. Evaluating financial performance: the actual profitability of the project is compared to the projected overall cost of capital and the actual cost of capital of funds raise to finance the project. if the actual profitability of the project is more than the projected and actual cost of the capital, the performance may be said to be satisfactory.
2. Acceptance criterion in the capital budgeting: Capital budgeting decision can be made by the considering the cost of the capital. Accounting to NPV methods of capital budgeting if the present value of the expected return from investment is greater than or equal to the cost of investment the project may be accepted, otherwise the project may be rejected. They present value of expected return is calculated by the discounting the expected cash inflow at the cut of rate (which is the cost of the capital).
3. Determination of capital mix in capital structure decision: financing the firm's assets. While designing an optimal capital structure, the management has to keep in mind the objective of maximizing the value of the firm and minimizing the cost of capital. Measurement of cost of capital from various sources is very essential in planning the capital structure of any firm.
4. Taking other financial decision: the cost of capital from various sources is very essential in planning the capital structure of any firm.
Define why we measure a project’s risk as the change in the CV. We calculate a project’s risk as the change in the coefficient of variation since this focuses on the change in
What the term objectives denotes- financial management It must be noted at the outset that term 'objective' is used in the sense of a goal or decision criterion for three decis
Effect on Stock Valuation Until the 1960s, common stocks were viewed as a good instrument against loss caused by inflation. Also, before 1960, stocks were not providing full he
Liabilities The company must take into account the nature of its liabilities as well as its solvency position. Cash Flows: Besides the investment yields, money flows as paid
Q. What is Emerging Issues Task Force? Emerging Issues Task Force (EITF) - Assists FINANCIAL ACCOUNTING STANDARDS BOARD (FASB) and provides guidance on early identification of
In how many area ratios are grouped Ratios can be grouped into 3 main areas: 1 Performance - how well business has done (profitability) 2 Position - short term standing
Advantage of Weighted Average Cost of capital 1) Straight Forward and logical: Weighted Average ost of Capital defines the oveall cost of capital as the sum of the cost of t
Q. Classification of Working Capital? Classification of Working Capital: - Working Capital is able to be classified in two ways firstly on the basis of concept and secondly on
What is the basic goal of a business? The primary financial goal of the business organizations is to maximize the wealth of the firm's owners. In turn Wealth refers to value.
Portfolios are simply combinations of different securities. The characteristics of investments do differ when we possess them in combinations or portfolios. As we shall see, an ass
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd