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5. Finance concepts 12 marks (a) Identify two reasons why the cost of long-term debt is cheaper than the cost of equity for a listed

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5. Finance concepts 12 marks (a) Identify two reasons why the cost of long-term debt is cheaper than the cost of equity for a listed company. (4 marks maximum of 80 words) (b) Explain why you cannot simply just compare the non-discounted value of the cash returns when deciding between the two investment opportunities. (4 marks - maximum of 80 words) (c) Explain why cash flows rather than profits from the Income Statement are used in the net present value method of investment appraisal. (4 marks maximum of 100 words)

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