Compute the Payback statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown below if the appropriate cost of capital is 8 percent and the maximum allowable payback is 4 years. Time: 0 1 2 3 4 5 Cash flow: -2,700 850 650 900 825 525 rev: 12_06_2012 Multiple Choice 3.36 years, Reject 2.36 years, Accept 3.36 years, Accept 2.36 years, Reject
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
Common stock is a type of security/instrument issued to Equity shareholders of the Company. These are commonly known as equity shares in India. It is also called ‘Common equity
Compute the Payback statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown below if the appropriate cost of capital is 8 percent and the maximum allowable payback is 4 years.
| Time: | 0 | 1 | 2 | 3 | 4 | 5 |
| Cash flow: | -2,700 | 850 | 650 | 900 | 825 | 525 |
rev: 12_06_2012
Multiple Choice
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3.36 years, Reject
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2.36 years, Accept
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3.36 years, Accept
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2.36 years, Reject
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