The cost of equity for the Mason Company is 14% and the after-tax cost of debt is 10%. Forty percent of its capital is in the form of ordinary shares and the other sixty percent consists of debt. The weighted average cost of capital would be (a) 14%. (b) 12%. (c) 12.4%. (d) 11.6%. You want to buy a house that costs $400,000. You have $50,000 in cash and want to finance the balance with a mortgage. A bank has offered to lend you money on the condition that it is repaid in 15 equal payment at the end of each year for the next 15 years. The mortgage rate will be 8% per annum. The annual amount (to the nearest dollar) that you will have to pay is (a) $26,667 (b) $58,418 (c) $40,893 (d) $23,333 The payback period is the length of time required for (a) cash inflows from the project to equal the initial investment expenditure. (b) cash inflows from the project to equal cash outflows on the project. (c) profits from the project to equal the initial investment expenditure. (d) cash inflows to equal accrual profits. Which of the following is often claimed to be a weakness of the accounting rate of return method of investment appraisal? (a) It does not take into account the time value of money. (b) All of the other options. (c) It ignores the future stream of cash flows. (d) It ignores the weighted average cost of capital