c)

Explain how you would estimate the cost of capital for a new investment project if its risk is different from the rest of the company? How would you estimate the overall cost of capital for a project when the company has debt in its capital structure? Explain how you could estimate the cost of debt given that the companys debt is publicly held.

(15 marks)

d)

Critically explain the importance of dividends and how dividend policy can affect the type of investors in the company but is irrelevant when estimating the companys value.

(15 marks)