Question
The Ritz Carlson is evaluating the following projects for investment. Swimming Pool Golf Course Restaurant Area Landscaping Cost $500,000 $500,000 $500,000 $500,000 Expected return 9.50%
The Ritz Carlson is evaluating the following projects for investment.
| Swimming Pool | Golf Course | Restaurant Area | Landscaping | |
| Cost | $500,000 | $500,000 | $500,000 | $500,000 |
| Expected return | 9.50% | 11.50% | 14.20% | 10.30% |
| Least Cost Financing Source | Debt - 8% | Equity - 11% | Equity - 11% | Debt - 8% |
The Ritz Carlsons summer intern has suggested taking all projects because the cost of their best (least cost) financing source is lower than their expected return. How would you respond to the intern?
Based on your calculations above, what projects, if any, should The Ritz Carlson invest in?
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Essentials Of Health Care Finance
Authors: William O. Cleverley
3rd Edition
0834203413, 978-0834203419
