Explain Explicit cost and Implicit cost.

Explain Explicit cost and Implicit cost.


Explicit cost is the cost which is external to the business like wage, rent and materials. It gives clear picture of the cash outflow from business which is used to decrease the end result of profitability. This directly affects the revenue of the company.

Implicit cost is the result of one person who tries to satisfy his needs in search of an activity which gives no reward to him by money or another form of payment. It includes benefits and satisfaction. For example- goodwill. It is not counted in terms of money and it is indirect intangible cost.
Explain cost of capital and its importance.
Cost of the capital is the rate of return which is minimum which has to be earned on investments in order…
How is the cost of capital measured?
Cost of capital is measured in terms of weighted average cost of capital. In this the total capital value of a firm …
Explain Traditional approach of capital structure.
Traditional approach is also known as Net income approach but it is the simplest form. It is in between…
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