Fundamentals of Finance Essay Example | Topics and Well Written Essays - 1000 words

Fundamentals of Finance - Essay ExampleFundamentals of Financewell-kept earnings means the amount of profit held by an organization, and that should be utilized for meeting the several requirements, except the payment of dividend. Break even point is a point at which the total cost and income equals, so at this point there should not be the question of profit or loss arises. So, the exhaustion of retained earnings also strongly related to the fundamental financing decisions and its implications. Break Even propose (BEP Output) in Units= Fixed Expenses/Contribution per unit.(C)Assume, fixed expenses (F) costs 60000 selling price per unit 15 multivariate cost per unit 10. Therefore, BEP= F/C per unit.Contribution (in unit) = Selling price per unit_ Variable cost per unit. i.e. 15_10=5BEP= 60000/5= 12000 Units.The composite of overall cost of capital of a firm is considered as the charge average cost of several sources of coin. Weights be taken as the proportion of each source o f funds in the overall capital structure of an enterprise. WACC is computed through a step by step process, such(prenominal) as Calculating the cost of specific sources of funds, then multiplying the cost of each source by its proportion in capital structure, and adding the weighted component costs. That is, K0= K1 W1 + K2 W2+ here, K1, K2 etc. are component costs and W1, W2 etc. are weights. Assume total number of equity shares is 1000 shares, 35/share, 35000 is the equity capital or NP. piece of music Dividend is 1750, i.e. 5% of 35000, and the cash dividend is 3.25/ share, i.e. 1000 shares 3.25/ share is amounted to 3250.