2006-09-17 08:26:32 · 3 answers · asked by jon_cvll 1 in Business & Finance ➔ Investing
Did you review sites like:
http://www.investopedia.com/articles/03/082703.asp
2006-09-17 14:21:26 · answer #1 · answered by Peter C 2 · 0⤊ 1⤋
normally, when you refer to cost of money, this means that you are computing the required rate of return for your cash. generally, there are two approaches for this problem.
1. you can compute the capital asset pricing model (CAPM) by using this formula: Rf + Beta x (Market Premium)
Where,
Rf= risk free rate, let's assume a 10% rate in an emerging country
Beta= covariance of your investment versus a market index, let's use 1.0 assuming our stock tracks the average market
Market premium= depends on what country you are investing in, for example emerging markets have a premium of 7%.
10% + 1.0 x (7%) = 17%
2. Another way is the look for the average money market rate or Treasury rate in your country. Make sure you use the correct tenor since you will have to consider the timing of your cash flows.
2006-09-17 22:38:43 · answer #2 · answered by J 4 · 0⤊ 0⤋
NOT SURE BUT ONE CENT COSTS ONE POINT THREE CENTS TO MAKE
2006-09-17 15:27:57 · answer #3 · answered by Penney S 6 · 0⤊ 0⤋