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Quires Related to Accounts

Umesh Bhise (119 Points)

01 September 2022

Dear Sir,

Please explain the below points

Cost of Capital
Present Value
Rate of Return

Appreciate your Help.

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3 Replies

Eswar Reddy S (CFO- at NHTF) (58275 Points)
Replied 01 September 2022

Cost of capital may be considered as finance / interest costs towards borrowed capital

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CA Rashmi Gandhi (Chartered Accountant) (86495 Points)
Replied 01 September 2022

Cost of capital is the minimum rate of return or profit a company must earn before generating value.

Present value (PV) is the current value of a future sum of money or stream of cash flows given a specified rate of return. Present value takes the future value and applies a discount rate or the interest rate that could be earned if invested.

Rate of return (ROR) is the loss or gain of an investment over a certain period, expressed as a percentage of the initial cost of the investment.

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sabyasachi mukherjee (27803 Points)
Replied 01 September 2022

Cost of capital is the cost incurred for maintaining the capital . There are two ways of maintaining cost of capital ...Weighted average cost of capital and cut off rate . Cost of debt , cost of equity which are being calculated on the basis of certain assumptions.
PRESENT VALUE OF MONEY IS FV/(1+R)^n
Today you hv invested some amount of money
what will be the value of same amount of money after 5 years.

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