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Cost of capital is cost of debt and cost of equity. The concept of cost of capital is important as it depicts the opportunity cost of making a specific investment.
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Why is concept testing important?
Concept testing is important so that advertising dollars and creation money is not wasted. If a concept fails in testing, the company will take another direction.
Why is Springfield Illinois so important?
its the capital.
What is after tax wacc?
WACC stands for weighted average cost of capital. So after tax means cost of capital after taxes are taken into account.
What is after-tax wacc?
WACC stands for weighted average cost of capital. So after tax means cost of capital after taxes are taken into account.
Why is the species concept so important?
they are important because they all depend from each other
Who do you put in the So What column of a synthesis organizer?
Why you think a concept is important
What do you put in the So What column of a synthesis organizer?
Why you think a concept is important
How much would a ford gt90 cost?
That is a concept car so it is not for sale. It cost Ford $3 million to develop it.
Why did the early explorers think Pangea is important?
They didn't know about "Pangea", so it wasn't important to them. This is a modern concept.
Why is delhi so important?
because Delhi is the capital city of india
Why was Maryland so important to the union cause?
It would later become their capital
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.
