Question
Assuming the company is raising external capital for two new projects worth 100m each in two different industries and the management is planning to use
Assuming the company is raising external capital for two new projects worth 100m each in two different industries and the management is planning to use the same discount rate to evaluate these two projects: Calculate the cost of capital of the external capital given current market conditions. Discuss the discount rate that the company should use to evaluate the two projects. Should the use the same discount rate for both projects?
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The Analysis And Use Of Financial Statements
Authors: Gerald I. White, Ashwinpaul C. Sondhi, Haim D. Fried
3rd Edition
0471375942, 978-0471375944
