Dwyer/Morris pharmaceutical is considering two major investments and the respective cash flows are as follows:

period project 1 cash flow project 2 CF 0 (100,000) (100,000)

1 10,000 50,000

2 20,000 50,000

3 60,000 10,000

4 70,000 5,000

5 80,000 5,000

Both projects will be financed using funds generated from: i. $1000,000 $1 Ordinary shares with a market value of $2.00 per share and an estimated cost of 22% ii. $500,000 $1 Preference shares with a market value of 80 cents and an estimated cost of 15% iii. $1 million Debenture stock with a market value of $80 per 100 nominal value and an estimated cost of 9% You are required to: Calculate the Weighted average cost of capital 9 marks Calculate the Net Present value of each project 11 marks

Question 2 A project has an initial cost of $60 000, expected net cash inflows of $12,000 per year for 5 years, and a cost of capital of 12%. What is the projects MIRR? 10 marks