Question $1$

The current market capitalisation of a company consists of R$8000000($equity$)$ and R$10000$

$000($debt$).$ The company intends to invest R$4000000$ in a new product. How should the

company finance the new product if its target D:E ratio is $60$:$40?$

Invest using both debt and equity finance.

Invest using more equity finance.

Invest using more debt finance.

The company should not invest in the project.