Question
Soundgarden Enterprises, is considering a $14,500,000 investment which has an IRR of 8 percent. If this investment were financed totally with equity what is the
Soundgarden Enterprises, is considering a $14,500,000 investment which has an IRR of 8 percent. If this investment were financed totally with equity what is the return on equity? If this investment project were financed with 25 percent of debt with a cost of 2.5 percent what is the return on equity? If the project were financed with 75 percent of debt with a cost of 2.5 percent, what is the return on equity? What if the actual return on the investment turned out to be (- 10) percent, what is the return to equity in each of the above scenarios? What if debt had a cost of 8 percent, how would this affect your answers to all of the above portions of the question? You must show your calculations for this part of the question.Soundgarden Enterprises, is considering a $14,500,000 investment which has an IRR of 8 percent. If this investment were financed totally with equity what is the return on equity? If this investment project were financed with 25 percent of debt with a cost of 2.5 percent what is the return on equity? If the project were financed with 75 percent of debt with a cost of 2.5 percent, what is the return on equity? What if the actual return on the investment turned out to be (- 10) percent, what is the return to equity in each of the above scenarios? What if debt had a cost of 8 percent, how would this affect your answers to all of the above portions of the question? You must show your calculations for this part of the question.
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