Reference no: EM132638935

Question 1. The Board of Directors of a share company are mulling on implementing a 10-years project that can require Br. 100 million initially. The project requires working capital of Br. 15 million every year and will have a net cash flow of Br. 12 million per year during its life. As head of the finance department of the company, they ask you to brief them on issues that they need to consider in relations to the decision areas of financial management (investment, financing - both short and long term and dividend). Please provide some insight on the project by referring to the decision areas of financial management without doing any number crunching. Strictly focus on the particular project given above rather than discussing the generic concept.

Question 2. Firms can finance their operation using different sources. The most common are debt, preferred stock, internal equity (retained earnings) and external equity (new stock issuance). Rank order them in terms of cost to a firm and justify why they have that cost structure.