MANAGEMENT

Detailed explanation-1: -Ans. Financing decision determines the overall cost of capital and the financial risk of the enterprise.

Detailed explanation-2: -Proportion of debt in the total capital determines the overall financial risk.

Detailed explanation-3: -To determine cost of capital, business leaders, accounting departments, and investors must consider three factors: cost of debt, cost of equity, and weighted average cost of capital (WACC).

Detailed explanation-4: -What are Financing Decisions? Financing decisions refer to the decisions that companies need to take regarding what proportion of equity and debt capital to have in their capital structure. This plays a very important role vis-a-vis financing its assets, investment-related decisions, and shareholder value creation.

Detailed explanation-5: -The long term investment decision is also known as capital budgeting decision.