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eFinanceManagement
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Meaning of Traditional Budgeting Traditional budgeting is a method of preparation of the budget in which last year’s budget is taken as the base. Current year’s budget is prepared by making changes to previous year’s budget by adjusting the expenses based…
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Activity based budgeting is a budgeting method in which budgets are prepared using Activity Based Costing after considering the overhead costs. In simple words, activity based budgeting is management accounting tool which does not consider the past year’s…
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Letter of Credit Discounting

Discounting of Letter of Credit (LC) is a short-term credit facility provided by the bank. In the Letter of Credit discounting process, the bank purchases the documents or bills of the exporter and in return make him the payment for a security or a fee.…
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Definition of Factoring Factoring is a financial service in which the business entity sells its bill receivables to a third party at a discount in order to raise funds. It differs from invoice discounting. The concept of invoice discounting involves,…
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Models for Calculating Cost of Equity

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Cost of equity can be defined as the required rate of return an investor would expect against supplying capital. Expected rate of return has a direct relation with risk. Higher the risk, higher would be the expected returns. Gordon’s dividend discount model and capital asset pricing model (CAPM) offers good insight into the concept and calculation of cost of equity.
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Weighted Average Cost of Capital (WACC)

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Zero Based Budgeting and Activity Based Budgeting are the most popular budgeting methods. The selection of preferred budgeting method depends on the functioning and suitability to an organization. Before understanding the differences, let’s go through the…
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Steps in Zero Based Budgeting

Zero-based budgeting (ZBB) is a management tool used to control the costs in an organization. It is a budgeting method where current year’s budget is prepared from the scratch i.e. taking the base as zero. The old and the new activities of the business…
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Cost of Preference Share Capital

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Cost of preference share capital is apparently the dividend which is committed and paid by the company. This cost is not relevant for project evaluation because this is not the cost at which further capital can be obtained. To find out the cost of acquiring the marginal cost, we will be finding the yield on the preference share based on the current market value of the preference share.
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Cost of Debt Capital – Yield to Maturity

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Cost of debt is the interest cost that a firm would have to pay for borrowed capital. Interest cost at which the securities of the firm were issued is the existing cost of capital. This is of no use because for any new project, it is important to see the cost of debt on marginal borrowing by the firm for undertaking the project. This cost of debt can be derived by finding yield to maturity.
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Investment Analysis and Appraisal

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Investment analysis and appraisal is one of the primary jobs of finance managers. It evaluates new investment opportunities for its physical and financial viability. Most important of all is the financial viability because financial survival has to be the first goal for any firm to achieve any other goal.
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finance, financial management, working capital, leverage, financial analysis, sources of finance, investment decisions, international financing, financial accounting
Introduction
eFinanceManagement is a Google + page of eFinanceManagement.com. Its a website on financial management. It explains "Financial Management Concepts in Layman's Language".
"eFinanceManagement"
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