25.Spin Chemicals has a cost of capital of 9% and is considering a 3 year project as well as a 7 year project. It can replicate these projects indefinitely. Below are the cash flows for the 3 year project. Cash Flows 3 year project: Year 0 Year 1 Year 2 Year 3 (140,000) 56,000 59,000 53,000 Calculate the Equivalent Annual Annuity for the 3 year project to assist Spin's CFO in making a choice between the 3 and 7 year projects. (No data is provided in this question for the seven year project. You are only to prepare the information regarding the three year project as needed for the decision making process as stated above.Show your calculation below.
Cost of Debt, Cost of Preferred Stock
This article deals with the estimation of the value of capital and its components. we'll find out how to estimate the value of debt, the value of preferred shares , and therefore the cost of common shares . we will also determine the way to compute the load of every cost of the capital component then they're going to estimate the general cost of capital. The cost of capital refers to the return rate that an organization gives to its investors. If an organization doesn’t provide enough return, economic process will decrease the costs of their stock and bonds to revive the balance. A firm’s long-run and short-run financial decisions are linked to every other by the assistance of the firm’s cost of capital.
Cost of Common Stock
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25.Spin Chemicals has a cost of capital of 9% and is considering a 3 year project as well as a 7 year project. It can replicate these projects indefinitely. Below are the cash flows for the 3 year project.
Cash Flows 3 year project:
| Year 0 | Year 1 | Year 2 | Year 3 |
| (140,000) | 56,000 | 59,000 | 53,000 |
Calculate the Equivalent Annual
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