Sample Industries is considering investing $20 million in plant expansion. The expansion will have a useful life of 10 years and at the end of the useful life, the company expects to sell it for $4 million. The company's capital structure includes $2 million of debt at 12 percent interest and $3 million of equity at 2 percent. If cash flows expected are $3 million annually, calculate the cost of capital and decide by using NPV method whether the investment shall be made. PV of $1 table: (6% and 10 years: 0.558); ( 7% and 10 years:0.508) PV of annuity table: (6% and 10 years: 7.360); ( 7% and 10 years:7.024) ANSWER BY CHOOSING THE MOST APPROPRIATE ANSWER FROM BELOW:

Sample Industries is considering investing $20 million in plant expansion. The expansion will have a useful life of 10 years and ot the end of the useful life, the company expects to sell it for $4 million. The company's capital structure includes $2 million of debt at 12 percent interest and $3 million of equity at 2 percent. If cash flows expected are $3 million annually, calculate the cost of capital and decide by using NPV method whether the investment shall be made. PV of $1 table: ( 6% and 10 yeart: 0.558) ) (7\% and 10 years 0.508) PV of annuity table: (6% and 10 years: 7.360);(7% and 10 years;7 024) ANSWER BY CHOOSING THE MOST APPROPRIATE ANSWER FROM BELOW