Which of the following statements describes the cost of capital?                           A) The internal rate of return on investments                           B) The maximum acceptable rate of return on investments                           C) The minimum rate of return on investments                           D) The interest rate the bank charges its best customer

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Q: What approach banks may take to determine adequate capital?

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Q: Which two techniques are used most often in firms’ capital budgeting practices?

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A: An investment is an asset that is brought with the intention of earning a return or profit from it.

Q: How do the attitudes of lenders and rating agencies affect capital structure?

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A:

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A:

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A: Short term investment decisions are the decisions related to day to day working

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A: Capital budgeting means where large and long term investment has to be made in project .

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A: Interest is the price paid by the borrower for using the money borrowed from the lender.

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

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

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A: Answer: If the expected accounting rate of return is greater than the required rate of return.

Q: How much interest rate is considered favorable for businesses in lending investment capital

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