A firm’s cost of capital represents the cost to the firm of accessing debt and equity capital. Business decision makers use the cost of capital as a minimum “hurdle rate” when determining if a project or investment will yield value to the firm. The cost of capital is also called the weighted-average cost of capital […]
Double-entry bookkeeping is a process of recording business transactions in which each transaction affects two or more accounts. The double-entry system was popularized by an Italian friar named Luca Pacioli. In 1494, Pacioli published a mathematics book which contained a section describing the double-entry system. This section, titled Particularis de computis et scripturis (details of
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When it comes to allocating capital, most investors have limited resources and, therefore, must choose among competing alternatives. Investors make these choices with reference to their opportunity cost. An investor’s opportunity cost represents the return on the investor’s next best alternative. In other words, the opportunity cost is the return which the investor foregoes by
