Which of the Three Costs-Debt, Preference Share Capital and Ordinary

question 79

Essay

Which of the three costs-debt, preference share capital and ordinary share capital-is most difficult to estimate?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

---

Definitions:

Executory Costs

Executory costs are expenses associated with fulfilling the terms of a contract, typically not included in the initial acquisition cost of an asset.

Guaranteed Residual Value

The minimum future value of an asset as guaranteed by a third party or agreement upon the asset's lease end.

Initial Direct Costs

Initial Direct Costs are expenses directly associated with negotiating and arranging a lease that are not included in the net investment in the lease.

Sale-leaseback

A transaction where an asset is sold and immediately leased back from the new owner, allowing the seller to continue using the asset while freeing up capital.