Investing 100,000 in additional raw materials, mostly palladium, should allow cryogenic concepts to increase production and earn an additional 112,000 next year. This payoff could cover the investment, plus a 12% return. Palladium is traded in commodity markets. The CFO has studied the history of returns from investments in palladium and believes that investors in the precious metal can reasonably expect a 15% return. what is the opportunity cost of capital? Is Cryogenic proposed investment in palladium a good idea? Why or why not?I believe the Opportunity cost of capital is 12% the minimum acceptable rate of return. I think that it would be a good deal because whether it's return on investment of 12 or 15% it's more than 100,000. However I'm confused by this question, the only example I got was in relation to whether a firm was reinvesting money or giving the money back to shareholders. In the example if the firm had reinvested money into their project it would have been a 20% increase, if they let the share holders have the money and invest in it on their own it would have been 10%. The minimum rate of return would have been 10.
Investing 100,000 in additional raw materials, mostly palladium, should allow cryogenic concepts to increase production and earn an additional 112,000 next year. This payoff could cover the investment, plus a 12% return. Palladium is traded in commodity markets. The CFO has studied the history of returns from investments in palladium and believes that investors in the precious metal can reasonably expect a 15% return. what is the
I believe the Opportunity cost of capital is 12% the minimum acceptable
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