Glossary

[Keyperson]

There has a lot of word / glossary i don't understand..

Any 1 can explain the below word by simple english.

1) Internal rate of return (IRR)

2) Prior charge capital

3) Cost of capital

4) LIBOR

5) Zero coupon bonds

Thx in advance

[Sonal]

There has a lot of word / glossary i don't understand..

Any 1 can explain the below word by simple english.

1) Internal rate of return (IRR)

2) Prior charge capital

3) Cost of capital

4) LIBOR

5) Zero coupon bonds

Thx in advance

IRR: - IRR is the required rate of return or cost of capital which produces a NPV of 0 when used to discount the project’s cash flows. When IRR is used to discount the cash flows, the PV of outflows = the PV of inflows.

Prior charge capital: The capital gearing ratio measures the proportion of a company’s capital that is prior charge capital. It represents capital carrying a right to a fixed return (e.g., debentures and preference shares).

For prior charge capital read: http://www.accaglobal.com/archive/2888864/31074

Cost of capital: It is an expected return that the owner of capital plans to earn on their investment. The relationship between cost of capital and the value of a firm is inverse.

LIBOR: It is the abbreviation of the London interbank offered rate, the rate of interest that banks charge to lend money.

Zero coupon bonds: Zero coupon bonds are issued at a high discount and paid at the full face value at maturity. Here, Price of bond < Redemption value of bond