How does leasing especially in a project finance venture increase financial leverage

Q: What effect does leasing have on a firm’s capital structure?

A: Introduction: A lease is nothing but a contract between lessor and a lessee. The lessee is entitled…

Q: In what way does leverage increase the riskiness of a loan?

A: The advantage a financial specialist or investor gets from utilizing debt is called financial…

Q: When do the firm expect to recover the initial investment?

A: The payback period alludes to what extent it takes for a speculator to hit breakeven to recoup the…

Q: Why do come companies prefer to use discounting in their capital investment decisions?  What is a…

A: Capital Investment:-It is an investment that a company made to purchase its fixed assets or…

Q: The cost of capital is: the required rate of return for new projects that have risk that is similar…

A: Cost of capital is required return used in capital budgeting decisions.

Q: What basic principle of finance can be applied to thevaluation of any investment asset?

A: Investor invests in any investment to earn the returns from it. As per the risk and return analysis,…

Q: how a failed capital project may shape the future strategy of investment capital.

A: Introduction: Capital projects are nothing but a long term capital intensive initiative aimed at…

Q: Evaluate the effect of gearing on cost of capital and firm value taking into consideration the…

A: Answer

Q: Explain how a net present value (NPV) profile is used to compare capital projects. How does this…

A: NPV also known as net present value is basically the present  value of all the future cash flows.…

Q: What is a real estate investment trust? Explain the difference between public and private REITs. How…

A: The following question are answered below : What is a real estate investment trust? Explain the…

Q: What is investor-supplied capital?

A: A business might make a return on its invested capital that surpasses the cost of that capital.

Q: Explain how a net present value (NPV) profile is used to compare capital projects. How does this…

A: The net present value is the sum of the present value of all the cash flows in the future subtracted…

Q: What are some ways that firms generate ideas for capital projects?

A: The development and ability of a company to stay successful rely on a steady stream of ideas for new…

Q: What are the effects of Borrowing on Project Cash Flows?

A: Cash flows are the cash generated from the operation of the business organisation. In other words,…

Q: The pecking order theory of capital structure suggests that managers will choose to utilise retained…

A: Pecking Order theory is an important theory in finance. It tells that the for funding purposes…

Q: Write Importance of sources of finance. What are the Advantages and Disadvantages of medium term…

A: Source of finance refers to the ways in which the business gets funds to start and execute its…

Q: why is a risk analysis important to the capital investment decision making process?

A: Risk is the uncertainty or possibility of loss due to the decision in investment process. Of all the…

Q: Explain Loan versus Project Cash Flows?

A: Accounting:   Accounting is a system, or a process of collecting and organizing economic…

Q: Determine the cost of equity to finance the plant modernization.?

A: The cost of equity is the revenue a firm needs to determine if a venture satisfies the conditions of…

Q: How does the capital asset pricing model (CAPM) influence financial decisions regarding risk and…

A: CAPM is related to the connection between the securities and their expected returns. CAPM is…

Q: Explain Financial Leverage?

A: Companies going for purchase of assets have three options for financing. They are equity, debt &…

Q: asset

A: The term CAPM or capitam asset pricing model is a model which shows the relationship between risk…

Q: Define aggressive approach (for short-term financing)

A: The aggressive approach is a high-risk strategy of working capital financing wherein short-term…

Q: What is investor-supplied operating capital?

A: Investor-supplied operating capital is the capital that is provided by the equity shareholders and…

Q: what are the benefits/risks of financial leverage?

A: Financial leverage is a condition wherein a company raises funds through the issue of additional…

Q: how do banks improve asset utilisation to increase Return on Equity and what are the risk…

A: Banks are the financial institutions which deposit money from customers at lower interest rates and…

Q: Discuss the advantages and disadvantages of using the Internal Rate of Return method for analyzing…

A: For the purpose of evaluating the capital investments, the company will make use of different…

Q: CAPM

A: Capital Asset Pricing Model: Capital asset pricing model is the model which describes the…

Q: What are the two types of risk according to the Capital Asset Pricing Model? Which of the two types…

A: The Capital Asset Pricing Model (CAPM) describes the link between systematic risk and expected…

Q: Murabaha financing and leasing

A: In Murabahah financing, Islamic banks are making a contract called purchase order accompanied with…

Q: What is the payback method of analyzing capital investments?

A: Formula: Payback period = Initial Investment / annual cash inflows

Q: Discuss the following terms…

A: Terms mentioned in the question relates to overall financial markets and management as well risk…

Q: Explain the term Return on Invested Capital?

A: The formula used to compute return on invested capital:

Q: Describe the concept of rate of return based on the return on invested capital in terms of a…

A: The term ROIC is used to calculate the profitability or return on invested capital that a business…

Q: Explain how the cash flows are structured in order to estimate thenet advantage to leasing

A: Net advantage to leasing (NAL) refers to the overall financial savings that might probably result…

Q: How does risk management affect a company’s ability to finance its projects?

A: Risk is associated with every business; there are some risks which are controllable by the…

Q: Why would an investor prefer the payback period to other methods of capital investment appraisal

A: The investor prefers the payback period to other methods of capital investment appraisal because in…

Q: Corporate finance is concerned with (i) what long-term investments the firm should choose, (in) how…

A: