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1) Future cost and historical cost: financial decision is based on the future cost and not on the historical cost. The decision related to the future and hence the cost are likely to be incurred in furthered costs.
2) Specific cost and composite costs: the cost of individual source of the capital of all the sources combined in the terms as composite cost or overall cost. It is thus the weighted cost thus. the cost of debenture and preference shares equity shares and retained earnings is to be secretly calculated first and then combined cost can be computed since the combined cost consider the quantum of the financing through each cost the cost is known as the weighted cost. It is this overall which is the important in the evaluating of a firm as on ongoing entity. The composite cost of capital is the cost which is to be considering while the evaluating capital project also. In case only one source of financing is to be used for the investment proposal the specific cost of that source of that funds may be consider but in a capital structure decision, it is always the weighted cost of capital that is significant.
Why is the replacement value of assets method not usually used to value complete businesses? The replacement value of assets process is not often applied to complete business v
Our geologist, Rebecca Paulka, has estimated from the earlier exploration that the Malian prospects have a 30% likelihood of containing economic quantities of uranium ore, the Nige
Illustration Find out the value of zero-coupon bond when maturity value is Rs.1,00,000, discounting rate is 12%, and the period is 25. Then,
(a) One could obtain a market arbitrage position as follows: buy Honeywell shares as well as sell General Electric shares. If the merger gets place the Honeywell shares will conve
What its the net income? Total current assets, plant and equipment, net plant and equipment, our net account receivable?
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The stocks of Microsoft and Apple have a correlation coefficient of 0.6. The variance of Microsoft stock is 0.4 and the variance of Apple stock is 0.3. What is the covariance bet
Monte-Carlo Simulation Let us, for a shortwhile, leave the illustration for determining the price and consider a simpler illustration for understanding the Monte-Carlo method
What are the primary reasons that companies hold cash? Companies hold cash to do necessary payments to take advantage of opportunities as they arise and to cover unforeseen eme
Restrictions on Investments: A mutual fund scheme shall not invest more than 15% of its NAV in debt instruments issued by a single issuer, which are rated not below investment
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