Consider two projects: A) with cashlows in years 0-4 of -300$, 120$, 120$, 120$ and respectively 120$, B) with casháows in years 0-3 of -300$, 150$, 150$ and respectively 150$ 4(a) Assume an opportunity cost of capital of 11%. Which of these projects would you accept, if you use the NPV method? 4(b) Which one would you prefer, among the two, based on their ProÖtability Index (PI)? 4(c) Which one would you choose if the cost of capital is 16%? 5(a) What is the payback period of each project? 5(b) Is the project with the shortest payback period also the one with the highest NPV? Explain. 6(a) What are the internal rates of return on the two projects? 6(b) Does the IRR rule in this case give the same advice i.e. preferred outcome as NPV? please answer only quest
Cost of Debt, Cost of Preferred Stock
This article deals with the estimation of the value of capital and its components. we'll find out how to estimate the value of debt, the value of preferred shares , and therefore the cost of common shares . we will also determine the way to compute the load of every cost of the capital component then they're going to estimate the general cost of capital. The cost of capital refers to the return rate that an organization gives to its investors. If an organization doesn’t provide enough return, economic process will decrease the costs of their stock and bonds to revive the balance. A firm’s long-run and short-run financial decisions are linked to every other by the assistance of the firm’s cost of capital.
Cost of Common Stock
Common stock is a type of security/instrument issued to Equity shareholders of the Company. These are commonly known as equity shares in India. It is also called ‘Common equity
Consider two projects: A) with cashlows in years 0-4 of -300$, 120$, 120$, 120$ and respectively 120$, B) with casháows in years 0-3 of -300$, 150$, 150$ and respectively 150$
4(a) Assume an
4(b) Which one would you prefer, among the two, based on their ProÖtability Index (PI)?
4(c) Which one would you choose if the cost of capital is 16%?
5(a) What is the payback period of each project?
5(b) Is the project with the shortest payback period also the one with the highest NPV? Explain.
6(a) What are the
6(b) Does the IRR rule in this case give the same advice i.e. preferred outcome as NPV?
please answer only question 5a,b and 6a,b
thanks
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