![]() Question-15: What is the cost of capital?Īnswer: The rate of return that management expects to receive on both borrowed and equity funds is referred to as the cost of capital. Question-14: What is the annual rate of return method?Īnswer: Annual rate of return method determines the profitability of capital expenditure by dividing expected annual net income by the average investment.Īnnual Rate of Return= Expected Annual Net Income/ Average Investment
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