CMA Study Group

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  • 1.  Marginal Analysis

    Posted 05-19-2022 05:35 AM
    could someone please explain this


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    KS
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  • 2.  RE: Marginal Analysis

    Posted 05-20-2022 10:10 AM
    Hello Kiriti,

    Now we have the explicit cost or out of pocket cost which is the actual cash disbursement.

    Implicit cost or opportunity cost is the maximum alternative benefit forgone because it has not been chosen.

    So now why the debt financing is an interest expense because I will pay it (out of pocket).

    So now when the cost of equity and the cost of  debt increases, the company's investment chance is at risk because it will increase and will not give creditors, investors and shareholders the chance to invest. And all that will make the company lose big investment chances which will lead to implicit cost of debt financing

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    Ahmed Zolfakar
    Director/Manager
    Giza
    Egypt
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