Cost of Capital-Capital Budgeting
Not what you're looking for?
How does cost of capital financing techniques affect the organization?
How do you use capital budgeting and relevant cash flow to compare investment alternatives?
Purchase this Solution
Solution Summary
How does cost of capital financing techniques affect the organization?
How do you use capital budgeting and relevant cash flow to compare investment alternatives?
Solution Preview
Question: How does cost of capital financing techniques affect the organization?
Answer: Cost of capital is the required return necessary to make a capital budgeting project worthwhile. Cost of capital includes the cost of debt and the cost of equity. Capital (money) used for funding a business should earn returns for the capital owner who risked his/her saved money. For an investment to be worthwhile the projected return on capital must be greater than the cost of capital. The cost of capital determines how a company can raise money (through a stock issue, borrowing, or a mix of the two). This is the rate of return that a firm would receive if it invested in a different vehicle with similar risk. Essentially, cost of capital financing techniques affects the way ...
Purchase this Solution
Free BrainMass Quizzes
Business Processes
This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.
Balance Sheet
The Fundamental Classified Balance Sheet. What to know to make it easy.
Motivation
This tests some key elements of major motivation theories.
Cost Concepts: Analyzing Costs in Managerial Accounting
This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.
Lean your Process
This quiz will help you understand the basic concepts of Lean.