Determination of explicit cost of capital, Financial Management

Determination of explicit cost of capital

Approach of determination of explicit cost of capital is similar to the one used to ascertain IRR, with one difference, in case of computation of IRR, cash outflows occur at the beginning followed by subsequent cash inflows while in the computation of the IRR, cash outflows occur at the beginning followed by subsequent cash inflows, whereas in computation of explicit cost of capital, cash inflow takes place at the beginning followed by a series of cash inflow subsequently.

Formula used to compute the explicit cost of capital (C) is:

 

1690_Explicit cost.png

Posted Date: 9/4/2013 5:52:20 AM | Location : United States







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

Write discussion on Determination of explicit cost of capital
Your posts are moderated
Related Questions
What are agency problems? and between what two stakeholders do agency problem typically occur?

Cash vs. Accrual Accounting: While it is beyond the scope of this module to assess accounting systems against all types of accounting styles, it is important that managers unde

The theoretical spot rates for treasury securities represent the appropriate set of interest rates that should be used to value the risk from default-free cash fl

What is Financial risk Financial risk is affected by mixture of long-term financing or capital structure, of firm. Firms with high levels of long-term debt in proportion to t

What is the difference among pro forma financial statements and a cash budget?  Explain why pro forma financial statements are not employed to forecast cash needs. Pro forma inco

Functions of Financial Management Traditional function of financial management has been limiting the role of finance toraising and administrating of funds required by the compa

For holders of CARDS, the interest is paid monthly and the principal is not amortized. The principal payments made by credit card borrowers are

FINANCIAL ISSUES OF DIVESTITURES Many corporations review the business portfolio to determine the operations that fit their core strategies. The firm's desire to achieve more f

1. Analyse the company's capital structure and critically assess different types of financing options available to the company. Calculate the cost of these different types of finan

In the telecom industry of the Australia, these are some most important organizations such Vodafone Austrelia‎, TransACT Capital Communications, Optus, and Telstra. Vodafone A