ACCT 002 Lecture Notes - Lecture 32: Cash Flow, Interest, Discounted Cash Flow
22 Oct 2020
School
Department
Course
Professor
Document Summary
The main financial goal for most businesses is to earn a profit. This might be stated as achieving superior financial performance, . Earning a reasonable return for the stockholders, or similar language. Identifies scarce resource allocations over the next several years. Focuses on acquiring and replacing long-lived expensive assets. Establishes who is responsible for the day-to-day operations of the organization. Long-lived assets are commonly referred to as capital assets. Whenever an expenditure is made to purchase something, the cost of that item will either be shown as an expense or as an asset. Cost of capital (cost of capital rate, required rate of return, or the hurdle rate) The cost of capital represents a firm"s cost of acquiring debt or equity financing. The cost of debt capital is the interest a company pays to its creditors. The cost of equity capital is what equity investors relinquish when they invest in one company rather than in another.
