Cash Flow Stream

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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Discount Rate Definition – Practical Example of Discount Rate and Discount Rate Formula

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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Expected Rate of Return – Simple Definition, How to Calculate, Benefits and Perception of Financial Professionals

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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Cost of Retained Earnings, Its Method and Calculation

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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Cost of Debt, Formula, Calculation, and its Benefits

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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Market Risk Premium – Definition, Formula and Calculation

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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Compensating Balance and its benefits

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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Best way to calculate company’s overall weighted average cost of capital

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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