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No. A high cost of capital is very expensive for an enterprise.Shares are a very high cost of capital as shareholders expect large dividend annually.
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Is a cell phone a capital good?
A capital good is a item that will have a long term value. Cell phones can have a cost high enough to qualify but there value is not long term This disqualifies this as a capital asset
What are the High capital cost of fashion industries?
Capital cost of fashion: Designers, models, modelling shows, fabric purchase/manufacture and assembly, advertising.
What are the main elements in calculating cost of capital How would an increase in debt affect the cost of capital How would you identify the optimal cost of capital for an organization?
Capital is calculated by subtracting the business costs from the profits gained from products and services. An increase in debt would decrease the total capital by increasing business costs. The optimal cost of an organization is low debt and high credits.
Is BMW a good first car?
NO, Due to the high initial cost and high maintenance cost.
What do you understand by cost of capital?
cost of capital
What is the meaning of capital cost?
what is capital cost
What is the concept of marginal cost of capital?
The marginal cost of capital (MCC) is the cost of the last dollar of capital raised, essentially the cost of another unit of capital raised. As more capital is raised, the marginal cost of capital rises.
Technology that is characterized by high initial cost and low operating costs is termed?
capital-intensive.
Suppose a firm estimates its cost of capital for the coming year to be 10 What are the reasonable cost of capital for an average risk project high risk and low risk?
In order to determine reasonable costs of capital for average, high and low risk projects the firm should develop risk-adjusted costs of capital for each category of risk based on the concept of divisional WACC. If a firm estimates that its cost of capital for the coming year will be 10%, the firm should use 10% as the basis for its average risk projects since the firm will need to achieve a minimum of a 10% return on all its projects. Typically, a high-risk project has the potential for higher returns and a low-risk project will typically yield lower returns. Therefore, the firm could set the cost of capital for its high-risk projects at 12% and the cost of capital for low risk projects at 8%. Since the average risk project has a 10% cost of capital, the overall risk of the firms projects will be equal to the 10% cost of capital. Similarly, if the firm's high-risk projects are particularly risky, they could be set at a 15% cost of capital and the low-risk projects will be adjusted down to a 5% cost of capital. The ultimate goal is that the portfolio of the firm's projects will achieve the required 10% return or greater so that the cost of capital to fund the projects is covered. The assignment of risk is somewhat subjective but it is better than not adjusting the risk at all.
Is capital a fixed cost?
capital is a fixed cost
What are the various concept of cost of capital?
concepts of cost of capital
Why is Weighted Average Cost of Capital important to an organization?
imoportant of capital cost to a hotel imoportant of capital cost to a hotel
