Concept of cost of capital Mace Manufacturing in the process of analyzing is investment decision making procedures Two proceviated by the fimm recently involved with new facilities in different regions, North and South The basic variables surrounding each project analysis and the resulting decision om are summarized in the following table a. An analyst evaluating the North tacity expects that the project will be financed by debt that costs the firm 48% What recommendation do you this analys will make regarding the investment opportunity b. Another analyst assigned to study the South facility believes that funding for that project will come from the firm's retained earnings at a cost of 18 2" What recommendation do you expect this analyst to make regarding the investment c. Explan why the decisions in parts a and b may not be in the best interest of the firm's investors d. If the firm maintains a capital structure containing 40% debit and 60% equity find its woghted average cost using the data in the table e. If both analysts had used the weighted average cost calculated in part d what recommendations would they have made regarding the North and South facilities? r. Compare and contrast the analysts initial recommendations with your findings in parte. Which decision method sooms more appropriate? Explain why a. An analyst evaluating the North facility expects that the project will be financed by debt that costs the firm 4 5% What recommendation do you think this analyst will make regarding the nvestment opportunity? (Select the best answer below) O A. The analyst will probably recommend investing in the North project because the project's expected return of 4.9% 5 greater than the expected financing cost of 79% using the after-tax cost of debt OB. The analyst will probably recommend investing in the North project because the proyect's expected return of 4 5% greater than the expected financing cost of 79% using the after-tax cost of debt OC. The analyst will probably recommend not investing in the North project because the project's expected return of 79% is greater than the expected financing cost of 45% using the after-tax cost of debt OD. The analyst will probably recommend investing in the North project because the proxect's expected return of 7.9% is greater than the expected financing cost of 45% using the after fax cost of debt 4.5% cost Don't invest 15.1%