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John Moffat.
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Sourav9271
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Hello sir,
In the context of residual income questions .There are several question in which, Two interests are given the former being cost of capital for the division and latter being annual rate of interest on long term loan..
Can you let me know which one is relevant?
John Moffat
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You are going to have to refer me to specific questions, because it depends as always on the wording. Divisions do not have a cost of capital in the normal sense of the word, and it is the head office who determines the rate of interest to use which would normally be their cost of capital.
Sourav9271
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