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Marginal or incremental cost of capital is cost of the additional capital raised in a given period
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∙ 15y ago
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How do you compute marginal cost of capital?
Take the first-order derivative of the cost of capital function.
What is the concept of marginal cost of capital?
The marginal cost of capital (MCC) is the cost of the last dollar of capital raised, essentially the cost of another unit of capital raised. As more capital is raised, the marginal cost of capital rises.
How does marginal revenue and marginal utility relate to capital?
Marginal revenue/margina utility return from capital represents the benefit of capital. When determining the optimal amount of capital, we must take into account the point when marginal benefit = marginal cost. This optimises profit/utility.
What is the affect of a per unit tax on marginal cost of production?
a per unit tax directly affects the marginal cost schedule by increasing the value of each marginal cost at each value by the amount of the tax
If a company's debt is low does marginal cost of capital apply?
Weighted average cost of capital includes cost of debt and cost of equity. Thus irrespective of existing proportion of debt and equity, the marginal cost is always applicable.
What is advantage of using the marginal cost of capital as a company's average hurdle rate?
Using a hurdle rate can help take the emotion out of defining capital value. This is the advantage of using the marginal cost of capital as the hurdle rate.
Why is the marginal cost of capital more relevant to making investment decisions than the historic cost of capital?
because of deprecation
How will you compute the cost of debt capital?
we keyin the credit then we take out the debit.?
What is The average cost associated with each additional dollar of financing for investment projects is?
the marginal cost of capital "B"
How to compute cost to be capitalized for acqusition of assets?
The cost to be capital its depend upon the company policy whether they should capitalze the cost or not.
How do you figure out the marginal cost of capital?
Depending on the capital: i.e. Let's say the capital is a product of your firm such as hammers. To determine the marginal cost, you have to figure out how much it costs to produce 1 unit (or hammer). To determine this, you divide the Total Cost (which is the sum of Total fixed Costs and Total variable costs) by the quantity of units that you are producing. Therefore, if your total cost equals $1000, and you produce 50 hammers, then your marginal cost is $20 because it costed you $20 per hammer.
When a firm's marginal revenues are higher than its marginal cost?
Marginal cost is
