Cost of Capital
MeaningWhat is the cost of capital? The cost of capital of an investor in financial management is equal to the return an investor can… Read Article
Capital Budgeting
Capital Rationing – Its Assumptions, Advantages and Disadvantages
Capital rationing is a common practice in most companies as they have more profitable projects available for investment than the capital available. In theory,… Read Article
Types of Capital Rationing – Hard and Soft
Capital rationing is the strategy of picking up the most profitable projects to invest the available funds. Hard capital rationing and soft capital rationing… Read Article
Project or Divisional Weighted Average Cost of Capital (WACC)
Meaning of Divisional or Project Weighted Average Cost of CapitalDivisional or Project Weighted Average Cost of Capital (WACC) is the hurdle rate or discount… Read Article
Importance and Use of Weighted Average Cost of Capital (WACC)
A company is raising funds from different sources of finance and doing business with those funds. The company has a responsibility to give a… Read Article
Market vs. Book Value WACC
Weighted Average Cost of Capital (WACC) is defined as the weighted average of the cost of each component of capital (equity, debt, preference shares,… Read Article
Evaluating New Projects with Weighted Average Cost of Capital (WACC)
The weighted average cost of capital is a weighted average of the cost of equity, debt, and preference shares. And the weights are the percentage… Read Article
Cost of Preference Share Capital
The cost of preference share capital is the dividend committed and paid by the company. This cost is not relevant for project evaluation because… Read Article
Models for Calculating Cost of Equity
The cost of equity can be defined as the required rate of return an investor would expect against supplying capital. The Expected rate of return… Read Article
Cost of Debt Capital for Evaluating New Projects – Yield to Maturity
The cost of debt is the interest cost that a firm would have to pay for borrowed capital. The interest cost at which the… Read Article
Weighted Average Cost of Capital (WACC)
Weighted Average cost of capital (WACC) is the minimum rate of return required to create value for the firm. Investors of equity, debt, preference… Read Article