Explain in detail about the cost of capital, Financial Management

Assignment Help:

Explain in detail about the Cost of Capital

Every type of capital used by the firm (preference shares, debt and equity) must be incorporated into the cost of capital, with relative importance of a particular source being based on percentage of the financing provided by every source of capital. Using of the cost a single source of capital as hurdle rate is tempting to management, particularly when an investment is financed entirely by debt. Though, doing so is a mistake in logic and can cause problems.

 


Related Discussions:- Explain in detail about the cost of capital

Agency policy theorem, How might management try to solve the problems foun...

How might management try to solve the problems found in agency theorem

Why business spend time, Why do businesses spend time, effort, and money to...

Why do businesses spend time, effort, and money to produce forecasts?  Explain. Businesses succeed or fail relies on how well organized they are to deal with the situations they

Reinforced concrete design, Q. Reinforced concrete design? In BS8110 fo...

Q. Reinforced concrete design? In BS8110 for reinforced concrete design, it is stated that longer tension lap lengths have to be provided at the top of concrete members. The mo

What circumstances would market to book value ratios, Under what circumstan...

Under what circumstances would market to book value ratios be misleading?  Explain. The Market to Book ratio is helpful, however it is only a irregular approximation of how li

Determine the objectives of profit maximisation, Determine the objectives o...

Determine the objectives of Profit maximisation Profit maximisation remains one of the key objectives for the managers of the companysince many managers' compensations are lin

Describes net operating income approach to capital structure, Q. Describes ...

Q. Describes Net Operating Income Approach to Capital Structure? NOI (Net Operating Income Approach):- This is another speculation of capital structure which is propounded by '

Define how fx futures market be used for price discovery, How can the FX fu...

How can the FX futures market be used for price discovery? Answer:  To the amount that FX forward prices are an unbiased predictor of future spot exchange rates, the market antic

Financial management, considering the following information,what is the pri...

considering the following information,what is the prise of the share as per gorden''s model?

Symmetric cash matching, We have earlier studied that the investor ma...

We have earlier studied that the investor may have to carry cash for some time because of discrepancies arising between the timing of the bond's cash-flow and the

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd