1. La Fonda Restaurants have an extra cash of $ 25,000. They have two investment options that...
Question:
1. La Fonda Restaurants have an extra cash of $ 25,000. They have two investment options that will earn interest either at the rate of 10% compounded semiannually or 9.5% compounded quarterly. Which would you advise?
2. Your company's philanthropy initiative invested $ 50,000 in an account earning 7% per annum interest. The initiative added $ 30,000 to the account at the end of fifth year. How much money will the initiative have at the end of ten years from these investments?
3. A company is planning a 50 million expansion. The expansion is to be financed by selling 20 million in new debt and 30 million in new common stock. The equity investors are expecting a 14% return. Before-tax required return on debt is 9%. If the company is in the 40% tax bracket, the company's marginal cost of capital is: