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In the context of Marginal Efficiency of Capital (MEC), what does the term "prospective yield" refer to?
- a)The cost of producing a capital asset.
- b)The expected profitability of a capital asset.
- c)The existing market value of a capital asset.
- d)The depreciation value of a capital asset.
Correct answer is option 'B'. Can you explain this answer?
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In the context of Marginal Efficiency of Capital (MEC), what does the ...
Prospective Yield in the context of Marginal Efficiency of Capital (MEC)
Prospective yield refers to the expected profitability of a capital asset in the context of Marginal Efficiency of Capital (MEC). It is a crucial concept in investment decision-making as it helps investors assess the potential return on investment before committing capital.
Importance of Prospective Yield
- Prospective yield provides investors with an estimate of the future earnings or cash flows that a capital asset is expected to generate.
- It helps investors evaluate the profitability of a potential investment and compare it with alternative investment opportunities.
- By considering prospective yield, investors can make informed decisions about allocating capital to projects that offer the highest expected returns.
Calculating Prospective Yield
- Prospective yield is calculated by estimating the future cash flows generated by a capital asset and discounting them back to the present value using an appropriate discount rate.
- The discount rate used in the calculation reflects the risk associated with the investment and the time value of money.
- The higher the prospective yield of a capital asset, the more attractive it is to investors as it indicates a higher potential return on investment.
Conclusion
In conclusion, prospective yield plays a crucial role in determining the profitability of capital assets in the context of Marginal Efficiency of Capital. By evaluating the expected returns of an investment, investors can make informed decisions about allocating capital to projects that offer the highest prospective yield.
Prospective yield refers to the expected profitability of a capital asset in the context of Marginal Efficiency of Capital (MEC). It is a crucial concept in investment decision-making as it helps investors assess the potential return on investment before committing capital.
Importance of Prospective Yield
- Prospective yield provides investors with an estimate of the future earnings or cash flows that a capital asset is expected to generate.
- It helps investors evaluate the profitability of a potential investment and compare it with alternative investment opportunities.
- By considering prospective yield, investors can make informed decisions about allocating capital to projects that offer the highest expected returns.
Calculating Prospective Yield
- Prospective yield is calculated by estimating the future cash flows generated by a capital asset and discounting them back to the present value using an appropriate discount rate.
- The discount rate used in the calculation reflects the risk associated with the investment and the time value of money.
- The higher the prospective yield of a capital asset, the more attractive it is to investors as it indicates a higher potential return on investment.
Conclusion
In conclusion, prospective yield plays a crucial role in determining the profitability of capital assets in the context of Marginal Efficiency of Capital. By evaluating the expected returns of an investment, investors can make informed decisions about allocating capital to projects that offer the highest prospective yield.
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In the context of Marginal Efficiency of Capital (MEC), what does the ...
Prospective yield in the context of MEC refers to the expected profitability of a capital asset over its lifetime. It represents the total net return that is anticipated from the asset throughout its operational years.
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In the context of Marginal Efficiency of Capital (MEC), what does the term "prospective yield" refer to?a)The cost of producing a capital asset.b)The expected profitability of a capital asset.c)The existing market value of a capital asset.d)The depreciation value of a capital asset.Correct answer is option 'B'. Can you explain this answer?
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In the context of Marginal Efficiency of Capital (MEC), what does the term "prospective yield" refer to?a)The cost of producing a capital asset.b)The expected profitability of a capital asset.c)The existing market value of a capital asset.d)The depreciation value of a capital asset.Correct answer is option 'B'. Can you explain this answer? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about In the context of Marginal Efficiency of Capital (MEC), what does the term "prospective yield" refer to?a)The cost of producing a capital asset.b)The expected profitability of a capital asset.c)The existing market value of a capital asset.d)The depreciation value of a capital asset.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for In the context of Marginal Efficiency of Capital (MEC), what does the term "prospective yield" refer to?a)The cost of producing a capital asset.b)The expected profitability of a capital asset.c)The existing market value of a capital asset.d)The depreciation value of a capital asset.Correct answer is option 'B'. Can you explain this answer?.
In the context of Marginal Efficiency of Capital (MEC), what does the term "prospective yield" refer to?a)The cost of producing a capital asset.b)The expected profitability of a capital asset.c)The existing market value of a capital asset.d)The depreciation value of a capital asset.Correct answer is option 'B'. Can you explain this answer? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about In the context of Marginal Efficiency of Capital (MEC), what does the term "prospective yield" refer to?a)The cost of producing a capital asset.b)The expected profitability of a capital asset.c)The existing market value of a capital asset.d)The depreciation value of a capital asset.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for In the context of Marginal Efficiency of Capital (MEC), what does the term "prospective yield" refer to?a)The cost of producing a capital asset.b)The expected profitability of a capital asset.c)The existing market value of a capital asset.d)The depreciation value of a capital asset.Correct answer is option 'B'. Can you explain this answer?.
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