Answers
Company can broadly categorise its capital sources into three
1) Equity
2) Debt
3) Preferred Equity
Equity is the owner’s capital in the business and equity holders have stake in the residual value of the company. As they are the residual holders they get paid after all other claimants in the firm. As such it is the riskiest from an investors point of view. To compensate for the risk, the firm must pay a risk premium to the investors. This makes equity the costliest of the sources of capital
Debt Is provided by the external creditors and is a statutory obligation on the part of the firm to repay the debt.
Debt capital comes with cost called interest and this has to repaid periodically as agreed in the debt covenant. Debt generally has the lowest cost associated . However a high risk firm with high probability of default would have a high cost of debt.
Preferred equity lies between Debt and Equity and has a higher preference over common equity but comes after debt in the order of repayment. Preferred equity holders generally get repaid with a fixed rate which is costilier than debt but most likely to be cheaper than common equity.
.Similar Solved Questions
1 answer
4. -13.33 points SerCP11 21.12.P.060. My Notes Ask Your Teacher A diathermy machine, used in physiotherapy,...
4. -13.33 points SerCP11 21.12.P.060. My Notes Ask Your Teacher A diathermy machine, used in physiotherapy, generates electromagnetic radiation that gives the effect of "deep heat when absorbed in tissue. One assigned frequency for diathermy is 2450.00 MHE. What is the wavelength of this radiati...
1 answer
A club of 10 members is to select 3 officers (president, vice-president and secretary)
A club of 10 members is to select 3 officers (president, vice-president and secretary). In how many ways can they do this?A club of 10 members is to select a committee of 3 persons. In how many ways can they do this?...
1 answer
Help with these please Consider the following half-reactions: Half-reaction Eo (V) F2(g)+ 2e 2F (aq) 2.870V...
help with these please Consider the following half-reactions: Half-reaction Eo (V) F2(g)+ 2e 2F (aq) 2.870V Sn2 (aq) + 2e- Sn(s) 0.140V Cr3 (aq) + 3e° _ Cr(s)-0.740V (1) The strongest oxidizing agent is: enter formula (2) The weakest oxidizing agent is: (3) The weakest reducing agent is: (4...
1 answer
Please answer all parts. ements. * Requirements In the last line of the journa . Journalize...
please answer all parts. ements. * Requirements In the last line of the journa . Journalize the ber 31, Fernvill Insurance Ex Prepaid Insur 1. Journalize the adjusting entries on December 31 2. The four-column ledger accounts have been opened for you using the unadjusted trial balance. Post the adj...
1 answer
Question 39 - Which patient is at greatest risk for acquiring pneumonia as a nosocomial infection...
Question 39 - Which patient is at greatest risk for acquiring pneumonia as a nosocomial infection while in the hospital? The patient who is receiving intravenous antibiotics to treat cellulitis of the lower leg The patient with diabetes mellitus who is recovering from a total hip replaceme...
1 answer
1). What are the independent and dependent variables in this study? Choose the best option from...
1). What are the independent and dependent variables in this study? Choose the best option from those listed below. A. There is one independent variable: the Bragger manipulation (Truthful Bragger vs. Untruthful Bragger). There are two dependent variables. First, there is the participant ethnicity (...
1 answer
Ber beam AB of span 10ft and nominal width 4 in (astin Knowing p?i ???= 140psi....
ber beam AB of span 10ft and nominal width 4 in (astin Knowing p?i ???= 140psi. determine 5. (20 points and nominal Wi width 3.5 in) i to support the three concentrated loads shown. that for the grade of timber used ? l-2000psi Tall the minimum required depth d of the beam200 2.5 kips I kip 2.5 kips...
1 answer
The desk as a weight of 75 lb and a center of gravity at G. The...
The desk as a weight of 75 lb and a center of gravity at G. The desk has a weight of 75 lb and a center of gravity at G. Determine its initial acceleration if a man pushes on it with a force F = 60 lb. The coefficient of kinetic friction at A and B is mu k = 0.2....
1 answer
You are a skilled contract attorney. You are approached by a married couple who wants to...
You are a skilled contract attorney. You are approached by a married couple who wants to have a baby, but due to difficulties conceiving, they require a surrogate mother. The couple is guardians of their 16-year-old niece who lives with them. The niece likes her aunt and uncle very much, knows of th...
1 answer
Which of the following statement is correct? a. for a list of current fraud scams, visit...
which of the following statement is correct? a. for a list of current fraud scams, visit the FBI's web sites. b. to see how many fraud or other complaints a vendor has had and whether the complaints were resolved, visit the Better Business Bureaus' web sites. c. for a list of telemarketing, ...
1 answer
A toolbox contains 71 nails, of which 34 nails are 4 inches long and 37 are...
A toolbox contains 71 nails, of which 34 nails are 4 inches long and 37 are 8 inches long. If a sample of 27 nails is randomly selected from the toolbox. (i) What is the probability that there are at least 2 four-inch-long nails in the sample? (ii) What is the standard deviation of the number of 8-i...
1 answer
Fill the blank, and please explain why,thanks. Check whether the binomial approximation is acceptable in each of the fol...
fill the blank, and please explain why,thanks. Check whether the binomial approximation is acceptable in each of the following hypergeometric situations. Check the accuracy of your approximation by using Excel to find the actual hypergeometric probability. (Round "n/N" answers to 2 decimal p...