The concept is regarding the return an investor can get from the very next alternative investment. Cost of investment in different types and facing risks about the same. The sources include equity share capital, debts, retained earnings and preference share capital. Components are zero risk turn, the rate of return while there are no financial or business risks. Premium for business risk and financial risks are the remaining two factors of capital. Before getting profit out of a business, sufficient income is to be generated to meet the cost of the capital which is used for different funding. For investors, they use this as a medium to evaluate the organization and check on other investments. It’s an important factor for determining capital structure, which can be tricky as it depends on equity as well as debt. The type of financing used in business determines the cost of the capital. More details can be obtained from the PowerPoint presentation.

Aparika Sharma

106 resources

0

1

1

Like