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Define the Explicit cost of capital
Explicit cost of retained earnings that involve no future flows to or from firm is minus 100 per cent. This must not tempt one to infer that retained earnings is cost free. As we will discuss in subsequent paragraphs, retained earnings do cost the firm. Cost of retained earnings is the opportunity cost of earning on investment elsewhere or in company itself. Opportunity cost is technically called as implicit cost of capital. It is the rate of return on other investments available to firm or shareholders in addition to that currently being considered.
The Managing Director of your firm is thinking aloud about an appropriate gearing level for the company: "The consultants I spoke to yesterday explained that some academic th
What level of profits can you earn in a perfectly competitive market and what drives markets towards perfect competition over the long run?
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Q. How will you conclude the cost of capital from different sources? Ans. Implication of Cost of Capital: - Cost of capital of a firm is the least rate of return expected by it
explain the relationship between shareholders and creditors
Q. Explain Safe Harbour Rule? Safe Harbour Rule - Concept in statutes and regulations whereby a person who meets listed requirements would be preserved from adverse legal actio
When an investor buys a bond in between coupon payments, he is supposed to compensate the seller with the coupon interest earned on the bond from the last coupon
Project Evaluation The expected value calculations are crucial to project investment decisions. The following example explains the use of probabilities in project evaluation.
Weighted average cost of capital of Firm: Use the following information to answer the questions. Security Beta Expected retur
Which one is true 1.the higher the discount rate the lower the cost of trade credit 2.the higher the discount rate the higher the cost of trade credit 3.cost of trade credit duri
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