1, opportunity cost
If it is internal financing, it is generally used "free of charge" and there is no need to actually pay the financing cost externally. However, judging from the average expected annualized expected return of various social investments or capitals, the expected annualized expected return of internal financing should also be paid after use. The difference between internal financing and internal financing is that internal financing does not require external payment, while other financing methods must pay external payment. The financing cost of internal financing represented by the expected annualized expected return should be the expected annualized interest rate of common stock, but it has no financing cost.
2. Risk cost
The risk cost of enterprise financing loan mainly refers to bankruptcy cost and financial distress cost. The bankruptcy risk of enterprise debt financing is the main risk of enterprise financing, and the loss of enterprise value related to enterprise bankruptcy is the bankruptcy cost, that is, the risk cost of enterprise financing. The cost of financial distress includes legal, management and consulting fees. Its indirect costs include financial difficulties that affect the enterprise's operating ability, at least reducing the demand for enterprise products, and the time and energy spent by management without the permission of creditors.
3. Agency cost
There will be a principal-agent relationship between the users and providers of funds, and the principal needs to supervise and encourage them to restrain the agent's behavior. The supervision cost and restraint cost generated during this period are the agency cost. In addition, capital users may also make investment behaviors that deviate from the maximization of customers' interests, resulting in overall efficiency loss.
Tips: The above contents are for reference only.
Reply time: 2022-01-1. Please refer to the latest business changes announced by Ping An Bank in official website.