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What do you understand by cost of capital?
cost of capital
What is the effect on IRR if cost of capital decreased?
A change in the cost of capital will not, typically, impact on the IRR. IRR is measure of the annualised effective interest rate, or discount rate, required for the net present values of a stream of cash flows to equal zero. The IRR will not be affected by the cost of capital; instead you should compare the IRR to the cost of capital when making investment decisions. If the IRR is higher than the cost of capital the project/investment should be viable (i.e. should have a positive net present value - NPV). If the IRR is lower than the cost of capital it should not be undertaken. So, whilst a higher cost of capital will not change the IRR it will lead to fewer investment decisions being acceptable when using IRR as the method of assessing those investment decisions.
How does the cost of debt differ from the cost of capital?
Cost of debt considers only the cost that goes to the debtholders. Cost of capital considers debt and equity costs both.
What is good debt to eqity ratio?
Good debt to equity ratio would be where your Weighted Average Cost of Capital is minimum. You can also see industry standards.
Significance of cost of capital in financial decision making?
capital budgeting decisions capital structure decisions
What can a corporation do to lower its cost of capital?
A finance manage of a company usually will choose methods that will raise capital that will cost the company the least and the methods can vary depending on the company. Selling stocks and more product sales are ways to reduce the cost of capital.
Why Cost of preference capital is lower than cost of equity capital?
It depends on level of risk involved with certain type of capital, as low the risk factor as lower the cost or interest. That same formula applies to government securities as well.
What is one country of comparative advantage in the production of a certain good?
It has a lower opportunity cost for production of that good.
Is high cost of capital good?
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.
Why does the weighted average cost of capital of firms that uses more debt capital lower that that of a firm that uses less debt capital?
Because the cost of debt is generally lower than the cost of equity. This is because in case of financial distress, debt-holders are repaid before the equity holders are, as well as because debt has the assets of the firm as collateral and equity does not.
good quality dentures upper and lower for person on a fixed income what would the cost be.?
Good quality denturesupper and lower for a person on fixed income what would the cost be.
What is the capital of lower saxony?
The capital of Lower Saxony is Hanover (Hannover in German).
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.
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
Is capital a fixed cost?
capital is a fixed cost
