How Can a Move to Cloud Computing Reduce Capital Expenditure

question 65

Multiple Choice

How can a move to Cloud Computing reduce capital expenditure?

• A) It can reduce the number of applications in use within the enterprise.
• B) It can reduce the number of IT staff in the datacenter.
• C) It needs less client computers to access the enterprise applications in the Cloud.
• D) It pays for the use of hardware, not for the value of the hardware at the time of purchase.

Understand the benefits of the interest tax shield and its impact on the firm's value.

Distinguish between types of risks (market, systematic, business, financial) associated with a firm's operations and capital structure.

Comprehend M&M propositions and their implications on corporate finance, including the effects of capital structure on firm value.

Understand the concept of capital structure and the relevance of debt-equity ratios.

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Definitions:

Sales Reported

The total revenue recognized from selling goods or services, as documented in financial statements or reports.

Financing Activity

Transactions and events whereby resources are obtained from, or repaid to, owners (equity financing) and creditors (debt financing).

Purchase

The act of acquiring goods or services in exchange for money, constituting a fundamental business transaction.

Company's Own Stock

Shares of its own stock that a company has bought back from shareholders and holds in its treasury.