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In economics and accounting, the cost of capital is the cost of a company's funds (both debt and equity), or from an investor's point of view is "the required rate of return on a portfolio company's existing securities". [1] It is used to evaluate new projects of a company.
Cost of new equity should be the adjusted cost for any underwriting fees termed flotation costs (F): K e = D 1 /P 0 (1-F) + g; where F = flotation costs, D 1 is dividends, P 0 is price of the stock, and g is the growth rate. There are 3 ways of calculating K e: Capital Asset Pricing Model; Dividend Discount Method; Bond Yield Plus Risk Premium ...
Mental accounting (or psychological accounting) is a model of consumer behaviour developed by Richard Thaler that attempts to describe the process whereby people code, categorize and evaluate economic outcomes. [2]
PsyCap has positive correlation with desired employee attitudes, behaviors and performance. [9]A meta-analysis of 51 independent samples found strong, significant, positive relationship between PsyCap and desirable attitudes (e.g., satisfaction, commitment, and well-being), behaviors (e.g., citizenship) and performance (self, supervisor rated, and objective) and a negative relationship with ...
In the psychology literature, psychological capital is usually taken to comprise hope, self-efficacy, optimism, and resiliency. These four cornerstones of psychological capital are all attitudinal. Mental capital is not only positive attitudes but also includes certain key skills that allow one to produce such mental goods as self-esteem and ...
It can be used as a self-assessment and a multi-rater assessment, meaning that the assessment considers the target individual's self-assessment alongside the assessments from others who rate the target individual's PsyCap. Psychological Capital Questionnaire Short Form (PCQ Short Form): The PCQ Short Form is a 12-item form of the PCQ. It is ...
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Such costs are separated into a firm's cost of debt and cost of equity and attributed to these two kinds of capital sources. A firm's overall cost of capital, which consists of the two types of capital costs, is then determined as the weighted average cost of capital. Knowing a firm's cost of capital is needed in order to make better decisions ...