Cost of capital

The agency cost theory proposed by Easterbrook (1984) and Rozeff (1982) implies that payment of dividends plays the role of keeping cash away from managers, thus reducing the agency costs for the company. The potential agency cost in association with the separation of ownership and management induce a conflict-mitigation role for dividend payments. Meckling and Jensen (1976)…

that the crushing machine will cost N210,000 payable immediately, have a useful life of 5 years with a residual value of N25,000. Net cash inflows for each of the next 5 years from the sale of recycled rubble are projected as: Year Net Cash flows 10% present value factors 15% present value factors. 1. 40,000 0.909 0.870 2. 50,000 0.826 0.756 3. 60,000 0.751 0.658…

Economies of scale can be defined as the benefits that a firm obtains from the large-scale production reduced cost and increased profit. Sunk cost refers to the startup costs that a firm incurs when entering the market. Moreover, my research will discuss the significant barriers to soft drink business entry in the United States, which are economies of scale and sunk costs. Additionally, it will also look at how these restrictions have affected the soft drink market in the United States.…

business plan shows the need for an action plan outlining the activities that should be further developed to deliver a unique value proposition and generate more income. Moreover, the recommendations also require a plan to address the company’s estimated cost of maximizing activities as compared to the original business plan. To effectively provide a unique customer experience the development of The Fun Center as a themed entertainment hub is essential (Orland, 2015). Specifically, this is…

be difficult to see at first. We will look at the three steps in documenting soft returns: (1) identifying a process improvement opportunity, which is improved time/efficiency; (2) create a formula to calculate the benefits; (3) and determine the costs of the process and the net benefits. In order to determine the return benefits from EHR implementation, it is necessary to establish baseline metrics that can be used as a guideline for measuring success after the implementation. Harris…

the company can further invest the capital for a greater return in the future. But, seeing the tension between the shareholders and BHP Billiton and the fact that BHP is financing itself through equity, it is assumed that BHP would decide to slow down its speed of expansion. According to the reports, the company’s operating costs excluding exceptional items increased at the rate of 11.8% per year over the last 3 years. Due to industry-wide cost pressure total costs exchange rate volatility and…

Power Marketing at ExxonMobil,” n.d.). Any business decision within each division affects the entire company in many areas including their weighted average cost of capital. The cost of capital has a major influence over a company’s operations and profitability (Easley & O’Hara, 2004, pg. 1553). One way that companies can influence their cost of capital is “by affecting the precision and quantity of information available to…

decide to withdraw in the mist of it. Table 1 below shows the number of companies withdraws from the process after the passage of the Sarbanes-Oxley Act of 2002: The Cost of an IPO Though used to raise capital, companies incur considerable amount of cost directly related to an IPO. For instance, a company going public incur legal cost, accounting…

is a framework for an industry analysis. It is applied to determine the level of competition in an industry and to measure whether companies in that industry can earn profits above their cost of capital. The greater the industry rivalry is the less probable it is for companies to earn above their cost of capital. Tesla’s electric vehicles (EVs) are based in the luxury segment. Incumbent automotive competitors are focusing on combustion motors as well as electric engines and a combination of…

following: (1) Supply and cost of electricity, natural gas, and raw materials, may change unexpectedly; (2) The possibility of changes in steel products’ demand; (3) Competition on imports and substitute materials may intensify; (4) Customer demand can be affected by the uncertainties regarding the global economy; (5) Changes to U.S. and foreign trade policy could alter current exporting and importing activites; and (6) New government regulations may increase environmental compliance cost…