Cost of capital

If we consider the environment as a component of the economy, it becomes evident that damage to nature, this addition to the cost, because the damage is nothing else than the future costs for its neutralization. Therefore, the load of environmental problems - this is the burden of the current value, which should not be postponed and carried over to future generations, and become a real element of social value. As for the intangible, the so-called non-economic, part of the economy (here we return to the ratio of tangible and intangible in the economic system), you should note the following. First, with respect to non-material production (trade and services), which is directly involved in market relations, his involvement in the social value can not be in doubt. Second, the most difficult aspect is the colossal social sphere, which is like away from the actual economy. This education, science, health, education, culture, ie sphere of cultural production. Therefore, not dwelling on the peculiarities of this sector participation in the creation of the product, its cost, pay attention to one of its principal aspects of reproduction. Let us take as a basis for the principle of reproduction of all the components of the economic and social life. Only in this way in an indissoluble unity, and to consider them, because even from a purely economic point of view, the object of the social sphere is the man who eventually becomes a real main productive force. How, then, is the spiritual part of production to create public value?The explanation lies in the unity of opposites, and cost savings in building costs. The bottom line is that the costs incurred in this area by acquiring intangible form of his life, turn increase the productivity of labor and capital used and economy, both human and material resources as a result of its materialization, "implant" in the process of synergistic interaction with the living hard workers in material production and services. In this case, you must learn transitivity cost savings. Savings of material resources, payroll means the reduction of costs that would be required for the reproduction of resources in the absence of their savings. It may be said, opportunity cost of capital, ensuring the highest socio-economic rather than purely economic effect, finds its most direct reflection of the social cost. In recent economic literature has appeared a point of view that the use of the category of value in economics is necessary, but should be left trying to find her a substance whether in work, whether in the cost, whether in the utility and take it as a "transcendent, owned economy , its depth, and not man. " It is not proposed to deny, but simply accept the price. We will not dispute the right of this point of view of existence, as well as others. But it is necessary to solve the problem of the unity of economic and social, economic and ethical as the nucleus of a new, fledgling system of human life and society. If you adhere to the principle of reproduction as a unity of production, distribution, exchange and consumption, the economy is no place for "non-economic. " From the standpoint of consumption, which in fact oriented and production, and distribution, and exchange, it gets "value" because it is predetermined income and those sectors of the economy, which seems to be not involved in the creation of goods and services. This also applies to those goods and services that people receive on a pro bono basis. The economic entity - the state assumes the burden of costs associated with the payment of these "free" goods and services they paid for it. Moreover, these "free" goods and services are based on actual cost value "non-economic" sectors of the economy, as the resources used to create these benefits are strictly the cost (market) assessment, including the wages of workers in these sectors of the economy. Interpretation of the cost of labor makes it possible to throw a real bridge in the area of ??ethics. After all, the labor theory of value, ethics and orthodox work is regarded as the main value. [see 4]

Conclusion

Company's capital structure reflects the ratio of debt and equity capital raised to finance long-term development of the company. As a result of decisions on funding, this ratio may be random in nature, or be the result of deliberate choice. But even deliberately set the proportion of debt and equity capital often far from optimal. The optimal structure - a ratio of debt and equity capital, where the minimum total cost of capital, which the company financed by long-term development, or the weighted average cost of capital (WACC, weighted average cost of capital). Capital structure - is an important strategic option of the company. On the one hand, the extremely low proportion of debt actually means under-utilization of potentially cheaper than equity, the funding source. This structure means that the company has formed the higher cost of capital, and creates for her excessive demands on future investment returns. On the other hand, capital structure, overloaded borrowed funds, also makes very high demands for return on capital, since the probability of default increases and growing risks for the investor. Understanding the basic concepts of financial management can be considered as a capital of one of the types of economic resources or factors of production (along with labor and land). The rate of return paid to investors as a fee for providing capital for the company is receiving this capital, the value of its (capital) prices. For the price the investor invested capital - is the opportunity cost arising from the loss of the ability to use the money in some other way, for example - to send them to a bank deposit. At the cost of capital as a measure of interest rate is used. Getting a bank loan, the company agrees to pay interest to the bank, whose magnitude will reflect the size and price of capital employed. For the price of the bank invested in their company credit will be the level of profitability, which he could get by investing the appropriate amount to the project, the level of risk which is comparable to the risk of credit issued. It is obvious that the bank does not want to lend to the company, if the amount of interest on the loan is lower than the opportunity cost. Therefore, in an efficient market price of capital for the recipient should not be less than the opportunity cost of the investor.

Refrences:

1. Meshcheryakov MN Principles of Economics

2. Allbest. ru

3. Wikipedia. org

4. Gundarev AV Economics. MA

5. Vladimir Kovalev Introduction to Financial Management

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