North $5,000,000 South $4,550,000 19 years 19 years 8.3% 14.6% Basic variables Cost Life Expected return Least-cost financing Source Cost (after-tax) Decision Action Reason Debt 4.9% Equity 16.2% Invest 8.3% > 4.9% cost Don't invest 14.6% 4.9% cost Don't invest 14.6%