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explain about the valuing securitiesobjective of any investor is to maximise expected returns from his investments subject to various constraints
what is meaning of perpetuityif annuity is expected to go on forever then it is known as a perpetuity and then the above formula reduces topresent
enumerate the present value of an annuitypresent value of an annuity can be calculated bypresent value a 1i n -1 i 1i nor to use the tables change
state the example to calculate the present value2 00000 is the amount which you require after 20 years for your retirement how much must you invest
how can we measure the present valuewhen we solve for present value rather than compounding the cash flows to the future we discount future cash
how compound values can be calculated on anannual basiscompound values can be calculated on anannual basis or on a half-yearly basis or on a monthly
procedure of measurement of future valueif we are getting a return of 10 in one year then what is the return we are going to get in two years 20
ho can we estimate that firm is going to benefit from projecto calculate how firm is going to benefit from project we need to calculate whether firm
explain about opportunity cost of capitalrisk free rate compensates for opportunity lost and risk premium compensates for risk it can also be known
what is risk free rate of returnthere is a risk free rate of return also known as time preference rate which is used to compensate for the loss of
determine the term- time value of moneyif an individual behaves rationally then he wouldnt equate money in hand today with same value a year from now
what is performance appraisal - cost of capitalperformance appraisal further cost of capital framework can be used to evaluate financial performance
explain about the debt policydesigning debt policy the debt policy of a firm is significantly influenced by the cost consideration in designing
define the meaning of rate of return on investmentan investment project which provides positive npv when its cash flows are discounted by cost of
what is the investment evaluationinvestment evaluation the primary purpose of measuring the cost of capital is its use as a financial standard
state the significance of the cost of capital it must be recognized at the outset that cost of capital is one of the most difficult and disputed
determine the amount of financing required the last factor determining companys cost of funds is the amount of financing required where cost of
a firms operating and financing decisions risk also results from decisions made within the company this risk is usually divided into two
what are the market conditions of cost of capital security may not be readily marketable when investor wants to sell or even if a continuous demand
state the economic conditions of cost of capitalgeneral economic conditionsthese include demand for and supply of capital within the economy and
what are the factors determining the cost of capitalthere are many factors which impact the cost of capital of any company this would mean that
determine the factors of financial risk by giving examplew t l companys cost of long-term debt two years ago was 8 percent this 8 percent was
explain about the financial riskfinancial risk are presumed to be constant changing cost of each type of capital j over time must be affected only by
determine the key factor affecting financing costsbecause cost of capital is measured under the assumption that both firms asset structure and its
state about the capital structure of financial riskfrequently the funds supplied to a firm by lenders will change its financial structure and charge