Essay Capital

Capital Budgeting
MODULE 9 CAPITAL BUDGETING THEORIES: Basic Concepts Decision Making Process 2.The
first step in the decision–making process is to A.determine and evaluate possible courses of action.
B.identify the problem and assign responsibility. C.make a decision. D.review results of the
decision. Strategic planning 39.Strategic planning is the process of deciding on an organization'
A.minor programs and the approximate resources to be devoted to them B.major programs and the
approximate resources to be devoted to them C.minor programs prior to consideration of resources
that might be needed D.major programs prior to consideration of resources that might be needed
Capital budgeting defined 1....show more content...
B.an investment in working capital is returned in full at the end of a project's life, while an
investment in depreciable assets has no residual value. C.an investment in working capital is not
tax–deductible when made, nor taxable when returned, while an investment in depreciable assets
does allow tax deductions. D.because an investment in working capital is usually returned in full at
the end of the project's life, it is ignored in computing the amount of the investment required for the
project. 30.The proper treatment of an investment in receivables and inventory is to A.ignore it
B.add it to the required investment in fixed assets C.add it to the required investment in fixed
assets and subtract it from the annual cash flows D.add it to the investment in fixed assets and add
the present value of the recovery to the present value of the annual cash flows 31.In connection with
a capital budgeting project, an investment in working capital is normally recovered A.at the end of
the project's life B.in the first year of the project's life C.evenly through the project's life D.when the
company goes out of businessA 32.XYZ Co. is adopting just–in–time principles. When evaluating an
investment project that would reduce inventory, how should XYZ treat the reduction? A.Ignore it.
B.Decrease the cost of
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Thesis on Capital Structure
CAPITAL STRUCTURE MANAGEMENT IN NEPAL (A CASE STUDY ON NABIL, NIBL, NEA,
NTC & HGICL) Table of Contents: RecommendationI Viva– Voce SheetII DeclarationIII
Acknowledgement IV List of FiguresV List of Tables VI AbbreviationVII CHAPTER I.
INTRODUCTION Pg No. 1. Background of the study 1 2. History of bank 5 3. Growth of industries
in Nepal 5 4. Statement of problem7 5. Objectives of the study8 6. Significance of the...show more
content...
Environment encouraging the industrial growth is missing in the picture. The manufacturing sector
in Nepal is small contributing 8% of its share to the total G.D.P. It consists mainly of small
industries. Capital goods industries are few in number. Most of the sectors manufacture food even
though the structure is changing. This sector consists of five sub–sectors namely a. Food, Beverage
and Tobacco b. Textile and garment c. Chemical d. Mechanical Engineering e. Electrical and
Electronics The production growth has been significant in paper, food, footwear, iron and steel,
beverage and chemical industries. Fund is the most important criteria to operate any kind of
business or organization. It can be raised by two sources i.e. Equity Capital and Debt Capital. These
two sources of capital comprise the total capital structure. Capital Structure refers to the composition
of all source and amount of funds collected to use or invest in business. In other words Capital
structure refers to the capital and long–term liabilities of balance sheet. Therefore, it includes
shareholder's fund and long term loans. It is different from financial structure as financial structure
includes both long term and short term source of financing while capital structure includes only long
term source of financing. Thus, a firm's capital structure is only a part of its financial structure.

Capitalism Essay
By definition, Capitalism is an economic system controlled chiefly by individuals and private
companies instead of by the government. In this system, individuals and companies own and direct
most of the resources used to produce goods and services, including land and other natural resources
labor, and "capital". "Capital" includes factories and equipment and sometimes the money used in
businesses (Friedman, 5).
Capitalism stresses private economic decisions. People are free to decide how they will earn and
spend their income. Companies may choose which goods and services to produce and how much to
charge for them. They also compete with one another to sell products. Nations whose economies are
based on capitalism include the United...show more content...
But even more than that, we commemorate the birth of Americans as free men. At a single stroke,
the Declaration of Independence and its ideas set America free from England, and set Americans free
from their own government. The Founding Fathers instituted America's government to protect the
freedom of its citizens, and to secure their rights to "Life, Liberty and the Pursuit of
Happiness."
These rights were created to secure freedom of thought and action for all Americans. Freedom of
thought is the freedom of an individual to use his mind: to educate and inform himself; to make
his own judgments; to reach his own conclusions; to set his decisions; to hold his beliefs; to
choose the whole course of his life. Freedom of action is the freedom of an individual to act on his
own judgment: to pursue his/her values; to strive for his/her goals; to work and to keep the product
of his/her work; to associate and trade with others; to act for the attainment of his/her inner
happiness.
The implementation of individual rights had revolutionary effects. The freedom and progress that
followed were unprecedented. Individuals, free from government interference, pursued their
happiness restlessly and produced tremendous amounts of wealth in the process. Individuals took
responsibility for their lives: for their education, their health care, their jobs, their

Cultural Capital
Whether you may know it or not, we will all possess some type of capital in our lives. Capital is
everywhere, and is a wide–ranging idea that is beneficial to a society and people alike. There are
many types of capital; however, Cultural capital and Social capital are two common types of capital
that have been studied by Sociologists for decades. Cultural capital refers to non–economic things
like skills and arts, and social capital refers the benefits of social networks. In my life, I currently
possess both cultural and social capital. My cultural capital mostly comes from my education.
After almost 12 years of schooling, I have learned many things, however, my cultural capital does
not come from the actual knowledge itself, but from the skills I have developed by growing up in
a public school and in a generally urban city. I have learned skills as a child such as how to read,
write, and speak, which are the most important skills to develop for children. But other than these
manifest functions, I have also developed latent functions such as knowing how to socialize, how to
study, and even how to dress. These things were intended for me to learn, however, they were never
exactly taught to me in my years of schooling. If things similar to these were taught in schools, it
...show more content...
Ever since middle school, I have been taking advanced classes. Taking these advanced classes
classify me, as well as the others in these classes, as being a capable minded student looking
towards college. This puts us in a subculture at our school in which we all share common values of
our education. Taking these advanced classes also shows to others that we are dedicated students to
our education, and have benefited us when applying to college or for jobs. These benefits also
extend out to receiving scholarships, as the advanced students are more likely to receive certain
scholarships that other students may not be available

Essay on Capital Asset Pricing Model
James D. Lowe
Trident University International
FIN301 – Principles of Finance
Module 3
Case Assignment
Assignment:
1. For each of the scenarios below, explain whether or not it represents a diversifiable or an
undiversifiable risk. Please consider the issues from the viewpoint of investors. Explain your
reasoning
a. There's a substantial unexpected increase in inflation.
b. There's a major recession in the U.S.
c. A major lawsuit is filed against one large publicly traded corporation.
2. Use the CAPM to answer the following questions:
a. Find the Expected Rate of Return on the Market Portfolio given that the Expected Rate of Return
on Asset "i" is 12%, the Risk–Free Rate is 4%, and the Beta (b) for Asset "i" is 1.2....show more
content...
Diversifiable risk
The entire economy will not be affected; in fact some companies in areas not affected by the
lawsuit will benefit as they will be able to fill a void in the market as the company in question faces
legal precedings.
2. Use the CAPM to answer the following questions:
a. Find the Expected Rate of Return on the Market Portfolio given that the Expected Rate of Return
on Asset "i" is 12%, the Risk–Free Rate is 4%, and the Beta (b) for Asset "i" is 1.2.
CAPM (Capital Asset Pricing Model equation is: r A= r f + beta A (r m– r f) risk free rate= r f = 4%
beta of stock= beta A= 1.2 return on market portfolio= r m = to be determined required return on
stock r A = 12.00%
Therefore, r m = 10.666% =(12.%–4.%)/1.2+4.%
Answer: return on market portfolio= 10.666%
b. Find the Risk–Free Rate given that the Expected Rate of Return on Asset "j" is 9%, the Expected
Return on the Market Portfolio is 10%, and the Beta (b) for Asset "j" is 0.8.
CAPM (Capital Asset Pricing Model equation is: r A= r f + beta A (r m– r f) risk free rate= r f =
beta of stock= beta A= 0.8 return on market portfolio= r m = 10% required return on stock r A = 9%
Therefore, r f = 5 % =(0.8*10.–9.)/(0.8–1)
Answer: risk free rate= 5 %

c. What do you think the Beta (Гџ) of your portfolio would be if you owned half of all the stocks
traded on the major exchanges? Explain.
The beta would be close to 1
This is

Capital Market Essay
CAPITAL MARKEt
A capital market is a market for securities (debt or equity), where business enterprises (companies)
and governments can raise long–term funds. It is defined as a market in which money is provided
for periods longer than a year. The capital market includes the stock market (equity securities) and the
bond market (debt). Money markets and capital markets are parts of financial markets. Financial
regulators, such as the UK's Financial Services Authority (FSA) or the U.S. Securities and Exchange
Commission (SEC), oversee the capital markets in their designated jurisdictions to ensure that
investors are protected against fraud, among other duties.
Capital markets may be classified as primary markets and secondary markets. In...show more
content...
Financial Intermediaries : The fourth important segment of the Indian capital market is the financial
intermediaries. This comprises various merchant banking institutions, mutual funds, leasing finance
companies, venture capital companies and other financial institutions.
These are important institutions and segments in the Indian capital market.
Primary market is that part of the capital markets that deals with the issuance of new securities.
Companies, governments or public sector institutions can obtain funding through the sale of a new
stock or bond issue. This is typically done through a syndicate of securities dealers. The process of
selling new issues to investors is called underwriting. In the case of a new stock issue, this sale is an
initial public offering (IPO). Dealers earn a commission that is built into the price of the security
offering, though it can be found in the prospectus. Primary markets create long term instruments
through which corporate entities borrow from capital market.
Features of primary markets are:
This is the market for new long term equity capital. The primary market is the market where the
securities are sold for the first time. Therefore it is also called the new issue market (NIM).
In a primary issue, the securities are issued by the company directly to investors.
The company receives the money and issues new security certificates to the

Bourdieu Social Capital Definition
Bourdieu argues that capital is what makes "the games of society" more than just a simple game of
chance (Bourdieu 1986: 241). It is the energy that drives the development of a field through time
(Grenfell 2008). Bourdieu does not restrict capital to its economic sense, however; he expands the
concept to other non–economic forms. By this expansion, Bourdieu shed light on other forms of
capital which are seen as disinterested and purposeless (Bourdieu, 1986). According to Bourdieu
(1986), the forms of capital are economic capital (money, other financial resources and material
assets), social capital refers to social networks and contacts of the individual, cultural capital is the
education and knowledge and the symbolic capital is the status...show more content...
when it is known and recognised as self–evident". It is the most authoritative capital for an
individual (Bourdieu, 1986). It is a source of power such as social agent's prestige or social
honour, etc. (Wolf, 2002). Unlike other forms of capitals, symbolic capital can be gained only
through recognition by others (Bourdieu, 1986). For example, The Epic of Gilgamesh is an epic
poem from ancient Mesopotamia. It is often regarded as the first great work of literature. The latest
and most complete version yet found, composed no later than around 600 B.C., was signed by a
Babylonian author and editor who called himself Sin–Leqi–Unninni. Tablet XI of Gilgamesh was
first translated into English and published in 1872. The first comprehensive scholarly translation to
be published in English was R. Campbell Thompson's in 1930. In addition, it has been translated into
too many languages. Its Arabic translation was translated by the former President and CEO of Saudi
Aramco, Abdullah S. Jum'ah. He obtained the exclusive rights from the publisher "Penguin" to
translate the epic into Arabic. Last year in Dammam, the Cultural and Arts Association organised an
event which opened with the theatre production of the epic and afterwards the translator signed a
great many copies of his

Who is responsible for our country in the future? Outside the unfortunate choice between Donald
Trump or Hillary Clinton, who else will continue to lead this nation? Children are always seen as
the adults of tomorrow. We always hope that the children we raise and teach will improve not only
their lives but the lives of others. A child's comprehension can be affected by everything around
them, so we must provide them an education and the help they need to become the America of
tomorrow.
Putnam says Social Capital is highly influential in a child's development. Putnam also suggests that
states that have a higher social capital, or a community whose citizens "trust other people, join
organizations, volunteer, vote, and socialize with friends–...show more content...
One group of scholars studied family life pertaining towards neighborhoods and particular family
as well. Through these studies many psychologists recognized the change in child abuse. Child
abuse would tend to be higher in neighborhoods with low adherence whilst being lower in areas
where citizens were more comfortable with having their children stay with their neighbors or
asking the neighbors for help. Another study lead by Desmond K. Runyan and his associates
concerned a group of children who were had a high risk of neglect and abuse from their parents.
After a couple of years 87% of the children involved with the study were "suffering from behavioral
and emotional problems." The scholars made a prediction that the children who were not affected
had "...the degree to which they and their mothers were enmeshed in a supportive social network,
lived in a socially supportive neighborhood, and attended church regularly.". Overall, there have been
many experiments that link social capital and the role of parents with their kid's life and the
development the child goes through growing up. These factors will make a momentous difference in
the life of the child thus showing the importance parents, teachers, leader and government officials
have in the future of America. (Putnam

Capital Budgeting Essay
Capital Budgeting Introduction Capital budgeting is the process of evaluating and selecting
long–term investments that are consistent with the firm's goal of maximizing owner wealth. A firm
using capital budgeting, their goal is to see if there fixed income will cover itself for profit. Fixed
incomes are things such as land, plant and equipment. When a firm using a machine to produce its
good or service. They most of the time what the machine to produce the amount that they paid for the
machine and more. The capital expenditure is the outlay of fund that a firm expects to produce and
benefit with in a one year. The Capital Budgeting Process When approaching the problem of trying to
the measure capital budgeting. The first step...show more content...
=53,742 Global Capital Budgeting In the international business world firms also use the Capital
budgeting process. When entering in to the international market there a couple of thing that are
measured different. The First thing is the cash outflows and inflows that occur in foreign currently
Companies face long–term and short–term currency risk related to both the invested capital and the
cash flows resulting form it. The Second thing is the foreign investment entail potentially significant
political risk. Political risks can be minimized by using both operating and financial strategies.
TECHNOLOGY When discussing capital budgeting, one must include the effects of technology.
Technology assessment can support the capital budgeting process by providing key information for
making decisions about capital requests. Technology assessment has been defined as a method for
evaluating the effectiveness of equipment, drugs, and clinical procedures.(e) However, in terms of
capital equipment planning, technology assessment can be defined more broadly as a method of
evaluating current and requested capital equipment by considering the results of published clinical
investigations and of physical assessment of the equipment in the decision–making process.
Technology assessment provides information for decision making in three areas. The department's
equipment needs. Information about a department's needs might include the

Capital Budget Paper
Integrative Problem and Study Questions Mark Camagong FIN 370 January 20, 2010 Art Philibert
Week 4 Assignment Integrative Problem and Study Questions 1. Why is the capital–budgeting
process so important? Capital budgeting decisions involve investments requiring large cash
outlays at the beginning of the life of the project and commit the firm to a particular course of
action over a relatively long period of time. As such, they are costly and difficult to reverse, both
because of: (1) their large cost and (2) the fact that they involve fixed assets, which cannot be
liquidated easily. 2. Why is it difficult to find exceptionally profitable projects? It is hard to...show
more content...
Only by examining cash flows are we able to correctly analyze the timing of the benefit or cost.
Also, we are only interested in these cash flows on an after tax basis as only those flows are
available to the shareholder. The incremental cash flows interest us because, looking at the project
from the point of the company as a whole, the incremental cash flows are the marginal benefits from
the project and, as such, are the increased value to the firm from accepting the project. 10–4. How do
sunk cost affect the determination of cash flows associated with an investment proposal? When
evaluating a capital budgeting proposal we are interested in only the incremental after–tax cash
flows to the company as a whole. Regardless of the decision made on the investment at hand, the
sunk costs will have already occurred, which means these are not incremental cash flows. Therefore,
they are irrelevant. 10–6. What are common reasons for capital rationing? Is capital rationing
rational? There are three principal reasons for imposing a capital rationing constraint. First, the
management may feel that market conditions are temporarily adverse. The second reason is a
manpower shortage, that is, a shortage of qualified managers to direct new projects. The final reason
involves intangible considerations. Whether or not this is a rational move depends upon the extent
of the rationing. If it is minor and non–continuing,

Capital One
Capital One Financial Corporation
1. How is Capital One's use of IT different from other mass customization strategies? Capital One
uses IT through its information–based strategy (IBS) to "record, organize, and analyze data on the
characteristics and behaviors of their customers," as stated by CEO Richard Fairbank. Their
philosophy was to exploit information by constructing scientific models that could be used to both
assess the creditworthiness of potential cardholders through FICO scoring, and to customize product
offerings for existing ones. This was done through data mining, sorting, customizing offers and
marketing campaigns, and then analyzing this data to see what campaigns worked – for what reason
and what...show more content...
Behavioral interviews, case interviews, and standardized tests were used to find raw talent without
focusing on prior industry or marketing experience. These four things are what separates Capital One
from its competition, and will sustain their competitive advantage in the future.
3. What are the consequences of Capital One's IT strategy for expansion into different segments of
the credit card industry, and into other industry's? The immediate consequences of their expansion
strategy proved the efficiency of their statistical modeling to inhibit Capital One from taking any
missteps into industry's that are either saturated or do not allow enough growth in the future. Capital
One considered expanding into auto insurance and auto financing, but fierce competition, low
margins, and stringent regulation kept them from pursuing this immediately. (Capital One did
recently acquire Summit Acceptance Corporation – an auto financing company that focused on the
sub–prime market). Next they looked at the energy and telecom industries, but consumer energy
usage patterns are available publicly which kept them from exploring this option further. America
One was created which resold blocks of calling time enabling Capital One to gain a foothold in
telecom. An ancillary effect of Capital One looking to broaden its horizons into other industries will
promote other companies to review their current IT systems to see where their inefficiencies lie, so
they can

Essay on Capital Structure
Introduction
The relationship between capital structure and firm value has been discussed frequently in the
literature by different researcher accordingly, in both theoretical and empirical studies. It has also
been discussed that whether the firm has any optimal capital structure that has been adopted by an
individual firm, or whether the proportions of debt usage is completely irrelevant to the individual
firm value.
A firm can choose a mix of three modes of financing i.e. issuing shares, borrowing from the market
and use of retained earnings. The ratio of this mix of funds purely depends on the firm and known as
optimal capital structure of the firm. This leads to the different capital structure theories. These
theories explain their...show more content...
Limited research work exists on this area, like Booth et al (2001) studied 10 developing countries
including Pakistan. However, this study was confined only to top 100 index companies. Second
study by Shah and Hijazi (2004) was an improvement on the first one as it included all non–financial
firms listed on KSE for the period 1997–2001. However, the second study too was basic in nature in
terms of its use of pooled regression model avoiding the fixed effects and random effects models.
The purpose of this study is to extend the work of Shah and Hijazi (2004) by extending the sample
period i.e 2001–2006 and including more firms in sample as convenient random selection of
samples, using relevant models of panel data and using more explanatory variables.
This study will further lead to the dynamics of KSE listed firms. Investor trends towards highly
leveraged firms and determination whether the optimum capital structure effects the decision of
investor resulting change in the balance sheet of a company.
Objective of the Study
The objective of this study is to check whether the changes in structure of capital has impact on the
overall value of the firms, and specifically in leverage ratio of firms listed in Karachi Stock
Exchange (KSE).
Literature Review
This section starts with the theory of irrelevancy of capital structure. Following subsections give the
overview of theories that suggest that the capital

Thomas Picketty Capitalism
In Thomas Picketty's book Capital, he questions the ability of capitalism to remain the prevailing
economic system in this country. Between 1945–1975 capitalism produced a system were incomes
of the masses began to converge. It was a period were almost everyone was to enjoy and reap the
benefits of the capitalistic system. However now that period seems more like an aberration, than a
trend. With rates of inequalities rising, and economic growth slowing, some have wonder whether or
not capitalism is doomed. Previous historical examples such as the French Revolution, have shown
us that the masses will not subjugate themselves to a system that they believe is unfair and unequal.
Today, capitalism has seemed to reach the tipping point, where we...show more content...
As we begin to elect more and more left of center politicians, the political mandate will change.
Currently, many believe that the government just serves the agenda of the elite. However if the
believes of the people change, so too will the politicians they will elect. The people will begin to
push for higher standards of living, and a close in the inequality gap. The way our new
government will tackle this is through redistribution. They will take private money and fund it
into higher minimum wage, public pensions, free higher education, and other programs aimed at
giving everyone a better life. These policies will be funded by the progressive taxes on capital,
and income. This seems much more likely than war and conflict because ultimately what people
want is more equality within the system. The best way to achieve this is through democratic
practices such as elections. However this process will not be easy. There are many hurdles to
overcome in order to fix the woes of capitalism and implement these programs. In the Great
Depression the United States succeeded in implementing many progressive programs that
ultimately helped lead the country out of the depression and into the Golden Age. However that
was at time when the government was much smaller. "In the wake of the Depression, World War
II, and postwar reconstruction, it was reasonable to think that the solution to the problems of
capitalism was to expand the role of the state and increase social spending as much as necessary.
Today's choices are necessarily more complex. The state's great leap forward has already taken
place" (Picketty 334). We need new approaches in order to tackle our issue. Today's society is
much different than the society FDR faced in the Great Depression. Incomes were rising, which led
to a greater acceptance of tax dollars going to these social

Cost Of Capital And Capital Essay
!!!What Is Cost Of Capital? How much will it cost and what will I get from it? These questions
often arise about most things in life. Investments are no different, the __cost of capital__ refers to
the debt or equity it will cost to finance an investment. Cost of capital always depends on the method
of financing used. An investment can either be solely financed through equity or debt; mostly it is a
combination of both. There are many sources of capital, such as common stock, bonds, long–term
debt, etc. A firms cost of capital is measured by using what is called __Weighted Average Cost of
Capital or WACC__. WACC is the average amount an investor expects to receive from an
investment. Investors often use WACC to determine whether to invest. __Example:__ Company A
has the following values: E = 500,000 (Market value of the company 's equity) D = 200,000 (Market
value of the company 's debt) V = 900,000 (Total Market Value of the company) Re = .07 (Cost of
Equity) Rd = .03 (Cost of Debt) T= .30 (Tax Rate) __WACC Formula__ = ((E/V) * Re) + [((D/V) *
Rd)*(1–T)] WACC= (($500,000/$900,000)x .07) +[(($200,000/$900,000) x .03) * (1–0.30))]
Calculating WACC can be time consuming and difficult, usually one would have to calculate each
component used in the formula. Flotation cost is a part of calculating cost of capital, lets review
exactly what flotation cost is and how to calculate it. !!!Flotation Cost __Flotation Cost__ are all the
expenses that a company will gain when

Capital Expenditure Budget
If I was going to prepare a capital expenditure budget request to add a retail pharmacy in the
hospital my first choice of two individuals I want on my team is the manager over the hospital
current pharmacy. They would have general knowledge based on the hospital patients what
illnesses and medicines are common to deal with and give us a valuable perspective on costs, space
and displays. In our text (Smith, 2014) " The manager of the hospital pharmacy can control the
number of pharmacists and technicians employed relative to patient volume and technicians
employed relative to patient volume and the expense for the management of the pharmacy. All of the
factors I mentioned is important with establishing a capital expenditure budget. The other

Financial Capital Structure Essays
Contents :
Introduction on Capital Structure
Summary and Evaluation of Articles
Conclusion
References/Bibliography
Introduction On Capital Structure :–
In the field of finance capital structure means a way an organization or firms finances their assets by
the way of some mix and match of Equity, Debt or Hybrid Securities.
The modern thinking on capital structure is based on the Modigliani–Miller theorem given by Franco
Modigliani and Merton Miller. The theorem suggests that in a perfect market the total value of the
company remains the same depending upon how is that company financed. This theorem proves the
importance of capital structuring by the firms throughout the globe. There are other reasons as well
like bankruptcy...show more content...
The corporate leverages are affected directly and indirectly by country–specific factors. The
researches in comparing the different capital structure around the globe started around past decade
or so and [Rajan and Zingales, 1995] did the initial comparison of seven advanced industrialized
countries. They came up with a remarkable discovery that in influencing a firm's capital structure not
only firm–specific factors but also country–specific factors play a vital role. [DemirgГјГ§–Kunt and
Maksimovic, 1999] came up with a different concept of comparing capital structure of firms in
developed and developing countries. They suggested that institutional differences between such
countries show a huge variation in long–term debt. Latest researches by [Graham and Harvey, 2001],
[Bancel and Mittoo, 2004] and [Brounen, et al., 2006] have suggested that even among developed
countries like U.S and European countries the institutional environment and internal operations
influences financial policies and managerial behavior. This article basically emphasis on direct
impact of countries characteristics on leverage. By analyzing 10 developing countries, [Booth, et al.,
2001] found that capital structure in such countries are affected similarly as in developed countries
but with a difference in the way leverage is affected by country–specific factors like GDP growth
and capital market development.
The other article relating to capital

Essay On Raising Capital
Raising Capital it one of the most important thing in any business. It's useless having a great idea
and the right connections if you don't have the money to get it going. Without capital, your business
can't get off the ground. You need it to buy products or materials, pay wages, have a secure cash
flow and generally run your business on a day–to–day basis. The most common types of debt capital
are bank loans, personal loans, bonds and credit card debt. When looking to grow, a company can
raise funds by applying for a new loan or opening a line of credit. This type of funding is referred
to as debt capital as it involves borrowing money under a contracted agreement to repay the funds at
a later date. With the possible exception of...show more content...
Entrepreneurship is one of the hardest investments to make because it requires more than just
money. Consequently, it is also an ownership investment with extremely large potential returns. By
creating a product or service and selling it to people who want it, entrepreneurs can make huge
personal fortunes. Bill Gates, founder of Microsoft and one of the world's richest men, is a prime
example.
1.3Precious Objects
Gold, Da Vinci paintings and a signed Cristiano Ronaldo jumper are all considered as ownership
investment – provided that these are objects that are bought with the intention of reselling them for a
profit. Precious metals and collectibles are not necessarily a good investment, but they can be
classified as an investment nonetheless. Like a house, they have a risk of physical depreciation
(damage) and require upkeep and storage costs that cut into eventual profits.
2.Lending Investments
Lending investments allow you to be the bank. They tend to be lower risk than ownership
investments and return less as a result. A bond issued by a company will pay a set amount over a
certain period, while during the same period the stock of a company can double or triple in value,
paying more than a bond – or it can lose heavily and go bankrupt, in which case bond holders usually
still get their money and the stockholder often gets nothing.
2.1You're Savings Account
Even if you have nothing but a regular savings account, you can call yourself an investor. You are

Essay Capital Budgeting
Capital Budgeting The city engineers presented city council members with two projects that require
large capital outlays. However, the economic downturn makes implementation of both projects
impossible with current budget restraints. Therefore, the city council decided to conduct a cost
benefit analysis to determine the most cost effective project. While neither project met all the
requirements, data analysis determined that Option B was the best choice. However, city engineers
pushed back stating that both projects are vital to the city. Consequently, it was necessary to consider
an alternative solution. The proposal below provides a detailed explanation of all options including
an alternative solution.
Explanation: Option A and...show more content...
The new capital cost for Option A is $–3,580,000.00 and for Option B is $–3,150,000.00. The net
present value for Option A with a discount rate of 12 percent, capital cost of $–3,580,000.00, and
benefits generated a negative net present value. While Option B with the capital costs
$–3,150,000.00, a discount rate of 12 percent and benefits equaled a net present value of
$763,122.00.
Project Justification: Option B While neither option meets all the criteria, Option B is the most
cost–effective and efficient option of the two. Additionally, Option B's higher internal rate of return
of nineteen percent provides the best re–investment opportunity for the future. Research shows that
the internal rate of return "is and has been a popular measure of worth for purposes of project
evaluation. It defines the return achieved by an investment (or true cost of a loan) and can often
be viewed as a measure of efficiency" (Hartman & Schafrick, 2004, p. 139). Additionally, Option
B has a positive net present value, while Option A has a negative net present value. In addition,
the payback period for Option B is five years and the payback period for Option A is 7.475 years. In
addition, the payback period for Option B is outside the city council's 2.75 years requirement. The
long payback period should not disqualify Option B from city council members' decision–making
process. Empirical tests show that "the net present value method is usually a better guide in the

Capital Structure theories
Capital Structure Theories
Capital Structure
Capital Structure is the proportion of debt, preference and equity capitals in the total financing of the
firm's assets. The main objective of financial management is to maximize the value of the equity
shares of the firm. Given this objective, the firm has to choose that financing mix/capital structure
that results in maximizing the wealth of the equity shareholders. Such a capital structure is called as
the optimum capital structure. At the optimum capital structure, the weighted average cost of capital
would be the minimum. The capital structure decision influences the value of the firm through its
cost of capital and can affect the share of the earnings that pertain to the equity...show more content...
This approach also says that the overall cost of capital is independent of the degree of leverage.
Features of NOI approach:
1. At all degrees of leverage (debt), the overall capitalization rate would remain constant. For a given
level of Earnings before Interest and Taxes(EBIT), the value of a firm would be equal to EBIT
/overall capitalization rate.
2. The value of equity of a firm can be determined by subtracting the value of debt from the total
value of the firm. This can be denoted as follows:
Value of Equity = Total value of the firm– Value of debt
3. Cost of equity increases with every increase in debt and the weighted average cost of capital
(WACC) remains constant. When the debt content in the capital structure increases, it increases the
risk of the firm as well as its shareholders. To compensate for the higher risk involved in investing in
highly levered company, equity holders naturally expect higher returns which in turn increases the
cost of equity capital.
Example:
Let us assume that a firm has an EBIT level of $50,000, cost of debt 10%, the total value of debt
$200,000 and the WACC is 12.5%. Let us find out the total value of the firm and the cost of equity
capital (the equity capitalization rate).
Solution:
EBIT

capital budget 1
Critically reflect on the importance of capital budgeting. Why is this heated subject in many
boardrooms? How does capital budgeting promote the financial health of an organization? How will
you use the financial techniques you have learned this week to promote the financial health of your
organization?
A capital budget is very important for a business. It is a heated subject because a decision about
capital budgeting can help the business to determine if the proposed investments or project are worth
taking or not. There are two things that a business has to take into consideration when it is making a
capital budget decision. First there are financial decisions that have to be made. Second, there is an
investment decision that is also...show more content...
If the business was to make an investment on a project that was not right or not profitable the
smart thing to do would be to not invest in the project or consider it at all. An investment that does
not make any money can be wasteful for the business and make it lose a lot of money in the long
run. That is why it is important for those who make the decision to evaluate all of their alternatives,
risks, and returns, etc in order to decide on whether or not to reject or accept a project that it might
have in mind.
As a result, to promote the financial health of any organization one should know the present value
of the investment and have a good ideal of how long that investment will take to mature and give
back returns. In order to create a capital budget I have to consider the needs of the organization,
look at the finances, goals, and position that the business is. In doing I could make a decision
about the needs of that business. Second, I would have to collect, compare, analyze, and evaluate
the cash and financial statements in order to compare the cost and revenue. It would give me some
lead way into the position of the business when it moves forward to the future. Third, the capital
budget would have to be compared to the cash flow, because it will help me to know how important
it is to make the investment only if it increases the financial bottom line and increase the total
financial performance of the business. I can use the

Essay Capital

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