QUESTION 7 ONLY

If the firm's cost of capital is 9 percent, which investment(s) would you recommend? Would your answer be different if the cost of capital were 14 percent? A firm's cost of capital is 12 percent. The firm has three investments to choose among the cash flows of each are as follows: Each investment requires a 51,000 cash outlay, and investments B and C are mutually exclusive Which investment(s) should the firm make according to the net present values? Why? Which investment(s) should the firm make according to the internal rates of return? Why? If all funds are reinvested at 15 percent, which investment(s) should the firm make? Would your answer be different if the reinvestment rate were 12 percent? Management of TSC, Inc, is evaluating a new 590.000 investment with the following estimated cash flows. If the firm's cost of capital is 10 percent and the project will require that the firm spend $15,000 to terminate the project, should the firm make the investment? An investment with total costs of $10,000 will generate total revenues of $11,000 for one year Management thinks that since the investment is profitable, it should be made. Do you agree? What additional information would you want? If funds cost 12 percent, what would be your advice to management? Would your answer be different if the cost of capital is 8 percent