The Rhodium division has prepared its budget for 2020 and its working capital requirements are summarised below: MONTH Rand January 8 450 000 February 9 150 000 March 6 250 000 April 3 750 000 May 2 850 000 June 10 500 000 July 2 925 000 August 10 625 000 September 5 200 000 October 4 600 000 November 7 300 000 December 8 100 000 The division is deciding whether to adopt an aggressive funding strategy or a conservative funding strategy. Short‐term funds can be borrowed at a rate of 16,25% per annum and long‐term funds at a rate of 19% per annum Determine the permanent component of the division’s monthly working capital funding requirements.
Cost of Debt, Cost of Preferred Stock
This article deals with the estimation of the value of capital and its components. we'll find out how to estimate the value of debt, the value of preferred shares , and therefore the cost of common shares . we will also determine the way to compute the load of every cost of the capital component then they're going to estimate the general cost of capital. The cost of capital refers to the return rate that an organization gives to its investors. If an organization doesn’t provide enough return, economic process will decrease the costs of their stock and bonds to revive the balance. A firm’s long-run and short-run financial decisions are linked to every other by the assistance of the firm’s cost of capital.
Cost of Common Stock
Common stock is a type of security/instrument issued to Equity shareholders of the Company. These are commonly known as equity shares in India. It is also called ‘Common equity
The Rhodium division has prepared its budget for 2020 and its working capital requirements are summarised below: MONTH Rand January 8 450 000 February 9 150 000 March 6 250 000 April 3 750 000 May 2 850 000 June 10 500 000 July 2 925 000 August 10 625 000 September 5 200 000 October 4 600 000 November 7 300 000 December 8 100 000 The division is deciding whether to adopt an aggressive funding strategy or a conservative funding strategy. Short‐term funds can be borrowed at a rate of 16,25% per annum and long‐term funds at a rate of 19% per annum
Determine the permanent component of the division’s monthly working capital funding requirements.
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