Cost of debt and equity and plus pricing, Management Theories

Cost of Debt:

The interest rate or rates charged to organizations by its lenders for use of the capital.

Cost of Equity:

The rate of return needs by organizations shareholders as compensation for the investment of capital.

Cost-Plus Pricing:

A method for pricing products and services where managers evaluate the cost of producing a good or service and then determine  their corresponding  prices by multiplying by a desired income factor. Cost-Plus pricing needs that a manager have a good sense of what the market demand is for a particular good or service, such that the manager can negotiate between a desired profit factor and what a customer will actually pay for a products or service.

 

Posted Date: 10/15/2012 8:46:42 AM | Location : United States







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