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9 Cards in this Set
- Front
- Back
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capital
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the term for funds that firms use.
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component cost of capital
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the cost of capital from a particular source, such as bondholders or common stock holders.
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flotation costs
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costs of issuing new securities.
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marginal cost of capital
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the cost of the last dollar of new capital that the firm raises.
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capital budgeting
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the process of evaluating and selecting long term investments.
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capital expenditure
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an outlay expected to benefit the firm over at least 1 year.
-operating expenditures benefit the firm over a period less than 1 year. |
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capital budgeting process
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1) proposal generation
2) Review and analysis 3) Decision making 4) Implementation 5) Follow-Up |
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Major cash flow components
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-initial cash flow
-operating cash flow -terminal cash flow |
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initial cash flow
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-installed costs of new assets
-after tax proceeds from sale of old assets. -change in net working capital |
