What is the appropriate measures to use

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Reference no: EM132774978

Questions -

Q1. The return of a portfolio is calculated as a weighted average. Is the portfolio standard deviation also calculated as a weighted average? Why or why not?

Q2. A company has outstanding debt with a coupon rate of 5% and a yield to maturity of 8%. If you were determining the WACC for this company, which of these rates would be most appropriate to use when estimating the cost of debt? Why?

Q3. Explain the decision criteria for accepting a project based on NPV and IRR.

Q4. If the life of a project is 5 years, should we always keep the project alive until it's physical life has ended (i.e. until the end of the 5 years)? Why or why not?

Q5. Explain what advantage each of the following measures offer when used to approve or reject projects: NPV, IRR, Payback method.

Q6. When estimating the weights for each source of capital, what is the appropriate measures to use? If this measure is not available, what other methods can be used to estimate weights for equity and debt?

Reference no: EM132774978

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