Capital components The amount of capital expenditures made, or to be made, at wh
ID: 2759746 • Letter: C
Question
Capital components The amount of capital expenditures made, or to be made, at which the firm's marginal cost of capital increases. Investment opportunity schedule The return required by providers of capital loaned to the firm. Opportunity cost principle The average rate paid by a firm to secure the outstanding financial capital used to acquire the firm's assets. Breakpoint This concept argues that a firm's retained earnings are not free to the firm. Target capital structure The combination of debt, preferred stock, and common equity that will maximize the value of the firm's common stock. Flotation costs These costs are generally expressed as a percentage of the total amount of securities sold, including the costs of printing the security certificates, applicable taxes, and issuance and marketing fees. Marginal cost of capital A table or graph of a firm's potential investments listed in decreasing order of their internal rates of return. Cost of capital The average cost of the next dollar of financial capital raised by a firm. Weighted average cost of capital. The elements in a firm's capital structure. Cost of debt The return that providers of financial capital require to induce them to provide capital to a firm, and the associated cost to the firm for securing these funds. A firm's cost of retained earnings, or internal equity, can be estimated using a variety of methods. Match the formula and/or the term to its corresponding description.Explanation / Answer
capital component I investment opportunity schedule G opportunity cost principle D breakpoint A target capital structure E floatation costs F marginal cost of capital H Cost of capital J weighted average cost of capital C cost of debt B