The Rationale and Financial Decision behind Leasing
Leasing of assets is a major financing decision because it allows a business to access and utilize an asset without having to purchase it outright, essentially “renting” the asset by making periodic payments to the owner (lessor) instead of taking on the upfront capital cost, thus impacting the company’s capital structure and overall financial strategy;…
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A complete guide on project finance and appraisal of project report
A recommendation in a project report is a suggestion or advice for a specific action or decision. The purpose of a recommendation report is to compare options and recommend the best one for solving a problem or filling a need. The credit officer of a bank would consider all the information provided by you in…
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Discounted and Non-Discounted Cash Flow Methods for Investment Appraisal
The Cash flow statement represents the increased or decreased position of cash and cash equivalents in a business Cash flow methods for Investment Appraisal can be broadly categorised into discounted cash flow and non-discounted techniques. In investment appraisal, “discounted cash flow” methods consider the time value of money by discounting future cash flows to their…
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Raising Trade Credits for imports in India
Trade Credits (TC) denote the credits extended by the overseas supplier, bank, financial institution and other permitted recognised lenders for maturity, for imports of capital/non-capital goods permissible under the Foreign Trade Policy of the Government of India. Depending on the source of finance, such TCs include suppliers’ credit and buyers’ credit from recognised lenders. The…
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Misconceptions about Cost of Capital clarified
Common misconceptions about the cost of capital include believing it is solely the cost of equity, considering it a desired return rather than a required return, thinking it is a fixed number for a company, assuming retained earnings are “free,” and not factoring in the weighted average of different capital sources when calculating it (such…
Impact of Flotation Costs on the Cost of Capital explained
Cost of capital is the cost of raising money for a business, while flotation costs are the fees a company pays when issuing new securities. Flotation costs are a factor in a company’s cost of capital. Cost of capital refers to the expense incurred by a company to fund its operations and investments. It encompasses…
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