What is Uneven Cash Flow Stream? Any series of cash flows that doesn’t conform to the definition of an annuity is considered to be an uneven cash flow stream. For example, a series such as: $100, $100, $100, $200, $200, $200 would be considered an uneven cash flow stream. However, you might also note that...
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What is 'Discount Rate' Discount Rate is the most common variable studied in the field of accountancy/business and finance, as it encapsulates an interest rate marked over commercial banks and other financial institutions for the amount received over the behalf of Federal Reserve’s discount opening. Another Definition of Discount Rate It’s the same rate, which...
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What is Expected Rate of Return: Expected rate of return is considered as the most powerful solution for finding some useful probabilities to evaluate numerous return outcomes that our investments may provide afterwards. It should be in our best interest that probabilities are highly depending upon the investor and the kind of investment made in...
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What is Cost of Capital? The cost of capital refers to the required amount of return which a company expects in order to accommodate the upcoming capital budgeting project. Cost of Capital includes building new and improved factories and industries as per the funds availability in the organization. In the accountancy world, the cost of...
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What is Cost of Preferred Stock: Cost of Preferred Stock is something that every business represents in the world as per their directions. It is considered as an equity security which defines the characteristics for both equity as well as debt. Considering ‘cost of preferred stocks’ as a hybrid instrument, it is possible that such...
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What is Cost of Retained Earnings: The retained earnings are considered as a specific portion of net income or net loss that is absorbed by an organization instead of disbursing them to its shareholders in the form of ‘dividends’. It should be in our best interest that finance experts assume ‘retained earning’ as an opportunity...
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What is Cost of Capital The cost of debt is considered as a specific amount of rate which a company must pay on its overall debt amount. It should be in our best interest that ‘cost of debt’ is analyzed either before tax or after tax return since some companies might as well deduct the...
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What is Market Risk Premium: The ‘Market Risk Premium’ is considered as an excess return over the stocks purchased by the individuals or the whole market that are associated with risk-free rate. Considering this as compensation, such aspect is being practiced in stock-exchange a market which helps business industrialists and investors in making the right...
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What is Compensating Balance: The finance professionals have labeled ‘compensating balance’ as the most minimal amount of balance that needs to be maintained in order to keep the account running. It should be in our best interest that compensating balances are commonly used to overcome the unbalanced portion of the expense that banks might experience...
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What is Cost of Capital: The Weighted Average Cost of Capital is a measurement of a company’s overall cost of capital, which includes the most important categories of the equity to weigh them through a specific equation. This statistical logic has helped numerous businesses worldwide and is considered as the most legitimate act of calculating...
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