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(i) No External Financing: - Walter' model presume that the firm's investment are financed exclusively by retained earnings and no external financing is used. If it was therefore then the model would be applicable to only those firms in which equity was the only source of finance.
(ii) Constant Rate of Return: - The model presumes that r is constant. This isn't a realistic assumption because when increased investments are made by the firm r as well changes.
(iii) Constant Equity Capitalisation Rate (Ke) :- The model presume that equity capitalization rate remains constant. This is as well not a realistic assumption because equity capitalization rate changes directly with the change in risk complexion of the firm.
Discounted cash flow analysis is the term employ to describe the technique whereby the value of future cash flows is discounted back to a present value so that the monetary values
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name the concept which increases the return on equity shares by changing the capital structure of the co.
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Q. How Amount of financing affecting cost of capital? Amount of financing as the financing require of the firm become larger , the weighted cost of capital increased several re
1. Find out the present value of Rs. 10,000 to be required after 4 years if the interest rate is 6%. 2. A Firm can invest Rs. 10,000 in a project with a life of three years.
State about the two types of Government Securities There are two types of Government Securities which are offered: Government Floating Rate Bonds which pay a floating rate
Cost of Retained earnings (K ) Retained earnings are that portion of EPS that is retained by the firm. This may be measured as the rate of return which the existing share hol
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