ECON 2B03 Chapter Notes - Chapter 13: Capital Budgeting, United States Treasury Security, Capital Market
Document Summary
What is capital budgeting: the decision to implement a mutually exclusive alternate that requires an expenditure of current capital funds. In well a well managed company this implementation decision is normally made as a part of the cbp: the capital financing and allocation functions are primary components of cbp. Capital financing: determines the funds needed from invest and vendors, and funds available from internal sources, capital allocation is where the competing engineer projects are selected. Terms negotiated directly between the borrowing and company and a financial institution: bond financing. Incur floatation cost the costs incurred by a publicly traded company when it issues new securities. Flotation costs are paid by the company that issues the new securities and includes expenses such as underwriting fees, legal fees and registration fees. Companies must consider the impact these fees will have on how much capital they can raise from a new issue. Onlyt interest is paid each year (or semi annually)
