1. Xyz Company wants to pursue a P200 million worth investment. The investment would give the firm 12% annual return on investment. In order to finance such investment, the firm needs to borrow money from a local bank that offers a 10% rate of interest. Should the firm pursue the project or not? Explain.

2. Mang Insar Company wants to pursue a P150 million worth investment. The investment would give the firm 11% annual return on investment. In order to finance such investment, the firm needs to borrow money from a local bank that offers a 15% rate of interest. Should the firm pursue the project or not? Explain.

3.Easy Corporation, a major hardware manufacturer, is contemplating selling P1 million worth of 10-year, 12% compound nods with a par value of P1,000. The applicable tax rate is 10%. Assuming the proceeds of the loan is equal to its face value of P10 million. What is the after-tax cost of long-term debt?

4.If a company were able to sell 11% preferred stock issue (P100 par value) at a current market price of P125 a share, what is the cost of preferred stock?

5.If a company were able to sell a 7% preferred stock issue (P60 par value) at a current market price of P72 a share, what is the cost of preferred stock?