Question
Jenkins Security has learned that a rival has offered to supply a parking garage with security of ten years for $40,000 up front and a
Jenkins Security has learned that a rival has offered to supply a parking garage with security of ten years for $40,000 up front and a further $20,000 per year. If jenkins Security offers to provide security for 8 years for an up front cost of $70,000 ad a seperate yearly payment, what is the maximum that this yearly payment can be so that Jenkin's offer matches he equivalent annual ammunity of their rival's offer? Assume a cost of capital of 5%
A. $3,989
B. $3,391
C. $3,590
D. $3,191
2. Different division with differing line of business use different costs of capital because their cost of equity is different and also because the__________could be different.
A. optimal volatility
B. optimal asset mix
C. optimal debt-equity ratio
D. optimal current ratio
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