Small businesses take out the commercial bank loans for a variety of reasons. Loans can come from other sources as well. But credit unions offer loans formally to business sectors. There are good and bad reasons for business loan.
Capital is the money businesses use for financing their operations. It’s the financing for the small business or the money used to operate and purchase of assets. Cost of capital is the cost of obtaining that money or financing for the small business. The cost of capital is also called the hurdle rate. Cost of capital is the key to all business decisions.
To understand the capital budgeting, you must have to understand both parts of this term.
‘Capital’ in represents long-term, fixed assets, or the capital investment, such as a building or machinery. “Budget” is the plan that details anticipated revenue and expenses during a particular time period, often the duration of the project.
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