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What will be the weighted average cost of capital

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Reference no: EM132471861

Question 1 - A. What are the different component of capital and what is the cost of each of them?

B. Valuation process of the bond is much easier than valuation of common stock, explain why?

C. What are the different methods for valuing the potential projects for the company, and what is the advantage and disadvantage of each of them?

D. What is the difference between actual return, expected return, & required rate of return?

Question 2 - The management of "BK" company is evaluating an investment project that will give a return of 15%. The project requires 10 million LE as a total investments that will be financed as follows:

6 million LE as a common stocks with a par value of 5 LE & a market value of 6 LE, with an expected cost of 13%.

100,000 shares of preferred stocks, at a par value of 10, a dividend of 10%, and market value of 8.

The rest will be financed through a long-term debt; with an interest rate of 15%. The current tax rate is 20%,

What will be the weighted average cost of capital (WACC), and what is will be your investment decision.

Reference no: EM132471861

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