The Chief Financial Officer of Eaton Medical Devices has determined that the firm’s capital investment budget will be $5,000,000 for the upcoming year. Unfortunately, this amount is not sufficient to cover all of the positive NPV projects available to the firm. Project Cost NPV A $1,061,191 $122,737 B 561,758 58,102 C 1,647,849 280,660 D 1,026,020 89,365 E 191,870 17,568 F 1,333,625 76,960 G 3,102,642 123,240 H 275,568 79,367 I 2,044,070 60,506 J 1,017,567 56,690 Using the Solver, determine which of the above projects should be included in the budget if the firm’s goal is to maximize shareholder wealth (Note: Set the Solver to use the Simplex LP method, and turn off the Ignore Integer Constraints setting.
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
The Chief Financial Officer of Eaton Medical Devices has determined that the firm’s capital investment budget will be $5,000,000 for the upcoming year. Unfortunately, this amount is not sufficient to cover all of the positive
|
Project
|
Cost
|
NPV
|
|
A
|
$1,061,191
|
$122,737
|
|
B
|
561,758
|
58,102
|
|
C
|
1,647,849
|
280,660
|
|
D
|
1,026,020
|
89,365
|
|
E
|
191,870
|
17,568
|
|
F
|
1,333,625
|
76,960
|
|
G
|
3,102,642
|
123,240
|
|
H
|
275,568
|
79,367
|
|
I
|
2,044,070
|
60,506
|
|
J
|
1,017,567
|
56,690
|
- Using the Solver, determine which of the above projects should be included in the budget if the firm’s goal is to maximize shareholder wealth (Note: Set the Solver to use the Simplex LP method, and turn off the Ignore Integer Constraints setting.)
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