If the return on assets is higher than the cost of capital, the firm is increasing the economic value of the book total assets. If the return on Assets is equal to the cost of capital, then the economic value of the total book assets are being maintained. Lastly, and unfortunately more ...
There are three factors to the cost of capital explained below: Zero Risk Return It talks about the expected rate of return when a project involves no financial or business risks. Premium for the Business Risk Business risk is determined by thecapital budgetingdecisions that a firm takes for it...
This paper examines the linkage between intangible assets and the cost of capital of a technology-utilizing firm. First, the basic concepts about intangible assets are presented. Then, the relationship between intangible assets and cost of capital are explained. Finally, an application in a ...
Because that is not the way we calculate the cost of debt. Given that the market value the debt is the present value of the future receipts, the only correct way of arriving at the cost of debt is to calculate the IRR as shown in the lecture. Hi Sir, Hi, I had a quick question ...
When physical capital is priced like a bond with a similar duration, a high term spread is associated with low average duration for investment. 30 percent of the cross-sectional variation in investment is explained by the term spread, implying an important role for the cost of capital in ...
The threecomponents of cost of capitalare: 1. Cost of Debt Debt may be issued at par, at premium or discount. It may be perpetual or redeemable. The technique of computation of cost in each case has been explained later. (a) Debt issued at par:The computation of cost of debt issued ...
Examples of implicit costs include the loss of interest income on funds and the depreciation of machinery for acapital project. They may also be intangible costs that are not easily accounted for, including when an owner allocates time toward the maintenance of a company, rather than using those...
In a statistical analysis, we find that this behaviour can be explained by a combination of agency theory and real options theory. We take this as important evidence that a full explanation of capital investment cannot be accomplished without a consideration of behavioural and strategic influences ...
investment between 1997 and 2007 are largely explained by the economic cycle, while the reduction in the tax component of the user cost of capital was ... M Giorgia - 《Oxford Review of Economic Policy》 被引量: 20发表: 2013年 Taxation and the cost of capital: a comparison of six EC ...
Weighted average cost of capital (WACC) represents a company's cost of capital, with each category of capital (debt and equity) proportionately weighted. WACC can be calculated by multiplying the cost of each capital source by its relevant weight in terms of market value, then adding the resul...