Fin 571 Week 4 Dq

Week Four Discussion Questions

is the cost of capital? How do you calculate the cost of capital? Why is it important in capital budgeting decisions. (due by midnight on Thursday)

Cost of capital is the required return or the opportunity cost for a project in order to increase the value of the firm in the market place. It helps managers evaluate if an investment is worthwhile by setting a benchmark for the minimum rate of return.

Cost of capital may be used as the measuring road for adopting an investment proposal. It measures the financial performance and determines the acceptability of all investment opportunities. The weighted average cost of capital (WACC) is used to measure a firm's cost of capital.

1. What are some capital budgeting tools? Explain...