The market value of a firm's equity increases, the cost of capital decreases.
The average fixed cost is equal to fixed cost divided by level of output, if the output increases; the average fixed cost is less.
Supposing that with capital you mean physical capital (all kind of physical investments like machines, and so on), it tends to increase the Gross Domestic Product (GDP), but increases in capital along time lead to lower increases in GDP.This is known in economics as the diminishing marginal returns.
As the cost of credit increases, the quantity demand decreases. in contrast, if the cost of borrowing drops, the quantity of credit demand rises.
If a firm over invest in net working capital, it incurs cost in the form of opportunity cost.
Exports increase. Imports decrease. FDI increases. Foreign capital investment increases. Economic growth rises. Besides these positives there is the negative effect and thats inflation which increases.
NPV decreases when the cost of capital is increased.
Disadvantage of share capital is that it increases the risk of default which causes the increase in cost of capital.
The average fixed cost is equal to fixed cost divided by level of output, if the output increases; the average fixed cost is less.
Supposing that with capital you mean physical capital (all kind of physical investments like machines, and so on), it tends to increase the Gross Domestic Product (GDP), but increases in capital along time lead to lower increases in GDP.This is known in economics as the diminishing marginal returns.
we can became ungry
As the cost of credit increases, the quantity demand decreases. in contrast, if the cost of borrowing drops, the quantity of credit demand rises.
If a firm over invest in net working capital, it incurs cost in the form of opportunity cost.
Exports increase. Imports decrease. FDI increases. Foreign capital investment increases. Economic growth rises. Besides these positives there is the negative effect and thats inflation which increases.
Exports increase. Imports decrease. FDI increases. Foreign capital investment increases. Economic growth rises. Besides these positives there is the negative effect and thats inflation which increases.
costs go down
The cost of capital is inversely proportional to the NPV. As capital costs increase (i.e. the interest rate increases), NPV decreases. As capital costs decrease (i.e. the interest rate decreases), NPV increases. You can see the relationship in the following equation: NPV = a * ((1+r)^y - 1)/(r * (1+r)^y) Where: NPV = Net Present Value (The present value of a future amount, before interest earnings/charges) a = Amount received per year y = Number of years r = Present rate of return
wht happens if WBC increases?