Financial Economics: Expected Returns

expected returns:

any project of economic interest requires capital, the timescales for expected returns are certainly important, not only is it a matter of satisfying initial credit claims but also determining the level of interest in the project. if i and my partners have to wait 14 years for the full level of expected returns, would we still be interested? what if it were only 4?

the larger the project, the more complex it becomes, in terms of asset classes formed and used and traded. financing or capital expenditure is key from the outset, not only to set up the venture but also to maintain the corporation. where does this capital come from? the credit/capital markets or from the forming partners. capital may be very expensive.

running costs may vary and can lead any company to bankruptcy. returns in the later years must be greater than costs.

R = Returns
C = Costs

R > C

CLEARCHARGE