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A firm has to choose between two investments, A and B. Both Investments have an initial cost of 10,000 AED and a life of 5

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A firm has to choose between two investments, A and B. Both Investments have an initial cost of 10,000 AED and a life of 5 years. The expected return of investment A is 7%. The financing for investment A will be done by issuing debt with a cost before tax 7% and the flat tax rate is 35%. Project B has an expected return of 19% and will be financed by issuing stocks with a cost of 13%. The firm's capital structure is 40% debt and 60% equity. The manager has the option to implement investment A or Investment B, which one is more profitable, or to accept both projects if the weighted average cost of capital is lower than the risk-free rate of 7%. (a). What would her decision be for investment A and investment B if are considered separately? (b). What is the weighted average cost of capital? (c). Justify manager's final decision. (d). Justify the decision of the manager in terms of ethicality

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