1. Identify the concept of the Cost of Capital as it pertains to Southeastern Homecare. Is it important to adjust for divisional differences? Explain.

2. Southeastern Homecare has two operating divisions: the Healthcare Services Division and the Information Systems Division. Southeasterns divisions are each considering two investment opportunities for next year. In which of the projects should Southeastern invest? State Accept or Reject under each opportunity and explain why you chose that decision.

Healthcare services division: IRR CCC Decision

A new office in Naples 9.3% 8.8% ?

A new office in Sarasota 9.8% 8.8% ?

Information services division: IRR CCC Decision

New healthcare record system 12.2% 12.7% ?

Expanded billing software 13.2% 12.7% ?