Money is life. Money is healthcare and food. Money is shelter. Money is family outings and entertainment. And unfortunately, money seems to be power.
Answer:
9.9702%
Explanation:
After-tax cost of debt=12*(1-tax rate)
= 12* (1-0.4) =7.2%
WACC=Respective cost*Respective weight
=(7.2×0.45)+(10.41×0.04)+(12.38×0.51)
=9.9702%
This answer requires that we fill in the blanks
- The net present value (NPV) method estimates how much a potential project will contribute to shareholder wealth
- The larger the NPV, the more value the project adds; and added value means a higher stock price.
- The NPV calculation assumes that cash inflows can be reinvested at the project's risk-adjusted WACC
- When the firm is considering independent projects, if the project's NPV exceeds zero the firm should accept the project.
- When the firm is considering mutually exclusive projects, the firm should accept the project with the higher positive NPV.
What is the NPV?
In order to get the NPV we have to make the following calculations for the projects A and B.
This is calculated as
Project A
-900 + 620/1.08 + 395/1.08² + 200/1.08³ + 250/1.08⁴
= $355. 237
For the project B
We would have to perform similar calculation
Hence we would have
-900 + 620/1.08 + 395/1.08² + 200/1.08³ + 250/1.08⁴
= 378.98
From the calculations that we have done above, we can see that the value for project B is greater hence we have to choose project B.
Read more on NPV here:
brainly.com/question/17185385
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Answer:
False
Explanation:
Amortization an act of spreading a loan into a series of fixed payments over time. An amortized loan is a loan with scheduled periodic payments of both the principal and interest. It first pays off the relevant interest expense for the period, after which the remainder of the payment reduces the principal.
Payments are made in regular installments of constant amount that consists of both principal and interest.
Common examples of amortized loans include student loans, car loans and home mortgages.