]

ONLY DO 10.13

Initial Alternative investrnnt, Incremental Alternative Rate of Rate Of S Return, % Return, % 12,5 14.1) 'l Iiji State approach in the. MARR all-etna(ive risk. faxes. illid tnarket are consi(leved in 10 the "l' capital, A partne ship engil'teecs dtiplex renlill husiness. years ago they putclwsecl a block o!'duplexe.s, Kl'iing u MARR or 14/31: per year. Thc for lhe dupEexes was per year, hut the investment was risky due 10 Ihe tenlal business in Ille city and Nonelheless. the purchase way. wilh 100% eqLlity year. Fortunaa.'iy. the per the years. Another purchase opportu- nil}' duplexes has pgesented but a loaf* per year httve in be make investntenl- (ui lhe for rental itnl signilicattt)y. is likely be tl lendeney muke lhe MA RR iiighc.t Illatl. lower (hall. Or lhe san')c as previously? Why? (b) What. is way consider (he rental husilless risk he involved? D.E Mix and W.AC(_ range pipeline needs be an estitnated cost o!' cellsorlium cooperating mics decided the iinaneial '0.15 $trrangements Of Ihis adventurous proice'. The WACC for Similar proiec15 Iras per Two financing identified. The first tequire!, an inveslnment equity funds at and a lhe balfinte an interest rate per year. The second allernacive requires only 20% equity funiLs und the oblained by massive intern:uionul estimated to curry an cost 12.5% per year, which is. in pun. based on the geographic locan (ion or the pipeline. Which financ- ing plan will result in the smaller average cost or capill? If (he consoitium CFOs lwve cided (hal lhe WACC musl not ex- ceed the S-year historical average of per year. whiN is lhe maxi, mum loan interest acceptable each finnneiiV ;illernalive'? A couple is planning ahead for (heir They fund or ali of the expeclecl tuition their funds (IEuuugh Education IRA or borrow or part it. The expected return for lheirown runds per year. the loan is expected have hik{her interest rates [he amount lhe loan increases. a spreudshcet- generale(l p101 orthe WACC curve and the estimated interest rates below in terrnine the, besl DeE mix for the- couple, Lean Amount, 10.000 60.000 75.000 100,000 Estimated Interest Rate, % per year 12.0