Q1)Suppose you have three indivisible assets, A, B and C with internal rates of return 2%, 5% and...

Question

Q1)Suppose you have three indivisible assets, A, B and C with internal rates of return 2%, 5% and 10% respectively and initial costs of $1, $4, $5.Suppose you have $6 at 1% and can borrow at 8%. What is the incremental cost of funds on asset C?Question options:  	 		 			 			6% 		 		 			 			10% 		 		 			 			1% 		 	  Q2)Suppose you have the following indivisible assets:  	A with initial cost of $2, IRR of 20% and present worth at 10% of $2 	B with initial cost of $3, IRR of 15% and present worth at 10% of $3 	C with initial cost of $5, IRR of 14% and present worth at 10% of $6 	D with initial cost of $6, IRR of 11% and present worth at 10% of $2  Which assets do you buy if you have a $6 capital budget?Question options:  	 		 			 			C 		 		 			 			A only 		 		 			 			D 		 	  Q3)Suppose you have three indivisible assets, A, B and C with internal rates of return 2%, 5% and 10% respectively and initial costs of $1, $4, $5.Suppose you have $6.5 at 1% and can borrow at 8%. What is the incremental cost of funds on asset B?********** I need details on this question
	
Document Preview: Q1)Suppose you have three indivisible assets, A, B and C with internal rates of return 2%, 5% and 10% respectively and initial costs of $1, $4, $5.Suppose you have $6 at 1% and can borrow at 8%.  What is the incremental cost of funds on asset C?Question options:6%10%1%Q2)Suppose you have the following indivisible assets:A with initial cost of $2, IRR of 20% and present worth at 10% of $2B with initial cost of $3, IRR of 15% and present worth at 10% of $3C with initial cost of $5, IRR of 14% and present worth at 10% of $6D with initial cost of $6, IRR of 11% and present worth at 10% of $2Which assets do you buy if you have a $6 capital budget?Question options:CA onlyDQ3)Suppose you have three indivisible assets, A, B and C with internal rates of return 2%, 5% and 10% respectively and initial costs of $1, $4, $5.Suppose you have $6.5 at 1% and can borrow at 8%.  What is the incremental cost of funds on asset B?**********     I need details on this question

Robert · Accepted Answer

Q 1) 
6% 
Working – 
Additional funds for asset C = initial cost of C – funds available 
Funds available = total funds available – investment in A and B 
 = $6 -$1 - $4 = $1. 
Additional cost of funds for asset C = $1 @ 1% + $4 @8% 
 = 0.01 + 0.32 = $0.

Q1) Suppose you have three indivisible assets, A, B and C with internal rates of return 2%, 5% and 10% respectively and initial costs of $1, $4, $5. Suppose you have $6 at 1% and can borrow at 8%....

Solution

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment