Cost of capital, Management Theories

Cost of Capital:

The rate of return available in the marketplace on investments comparable both in conditions of risk and other investment characteristics, such as marketability and other qualitative factors. A more practical definition is the following: the predictable rate of return an investor would wants to be induced to purchase the rights to future streams of profits as reflected in the business interest under consideration.  Cost of capital is an integral element of the business evaluation procedure. However, it is determined by the market and is totally out of management's control. Cost of capital presents the degree of perceived risk by potential investors: the lower the perceived possibility, the lower the cost of capital.

 

 

Posted Date: 10/15/2012 8:45:34 AM | Location : United States







Related Discussions:- Cost of capital, Assignment Help, Ask Question on Cost of capital, Get Answer, Expert's Help, Cost of capital Discussions

Write discussion on Cost of capital
Your posts are moderated
Related Questions
what are the practical consequences of incorporation?

The importance of understanding external Environment for a business

Under uncertainty, the risk averter  decision criterion is a. LaPlace. b. Maxi-max. c. Expected value. d. Maxi-min.

What is the purpose of organization

Distinctive Features of Case Study: a.Increase of Knowledge: like the historical method the traditional case study method also serves a dual purpose. While intensive investi

Advantages: 1.Many social events are such that they have already occurred and cannot be repeated or replicated. Causes behind many events cannot be created or reproduced. Hence

assignment on recruitment and selection for secretary for surance campony

selection process?

Cost Str ucture: The bond of a firm fixed costs to its variable costs. Firms with high fixed costs and low variable costs have a cost construction where a high volume