Question: 5. Finance concepts 12 marks (a) Identify two reasons why the cost of long-term debt is cheaper than the cost of equity for a listed

5. Finance concepts 12 marks (a) Identify two reasons why the cost of long-term debt is cheaper than the cost of equity for a listed company. (4 marks - maximum of 80 words) (b) Explain why you cannot simply just compare the non-discounted value of the cash returns when deciding between the two investment opportunities. (4 marks - maximum of 80 words) Explain why cash flows rather than profits from the Income Statement are used in the net present value method of investment appraisal. (4 marks - maximum of 100 words) (c)

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