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How to Measure cost of capital? explain the measures of
cost of capital
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Answer Posted / dharmika
cost of capital is one of the consideration for taking a
decision whether to distribute dividend r not.
As a decision makeing tool,the board calculates the ratio
of rupee profits the business expect to earn out side(RC)
i,e Ra/Rc
If the ratio is less than one,it is signal to distribute
dividend and if it is more than one,the distribution of
dividend will be dicontinued.
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