[goldybird]

Dear John

Thank you for your replies and your great lectures.

[goldybird]

Thank you for clarifying.

Another question please:

We are using the minimum required return from shareholders or lenders as the cost of capital to determine if a project should follow through or not.

If through equity- the return required is the dividend SH’s expect as a percentage to the shares they have paid. This is after they have allowed for some retaining of earnings.
Using this percentage as the minimum return on an investment will not allow for the additional profit needed for those retained earnings in the company.

If it is financed through debt, would it not be sensible that a company would require a decent profit above what the interest costs them?

Thank you again

[Author]

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