Question: Specific Questions 1. Using the Capital Asset Pricing Model, what is the required rate of return on equity, ke (cost of equity) for Tortuga? 2.

Specific Questions 1. Using the Capital Asset Pricing Model, what is the required rate of return on equity, ke (cost of equity) for Tortuga? 2. Analyzing the companys bond, what is the yield to maturity on the bond issue, kd (cost of debt)? 3. Using the market weight of equity, the original issue amount of debt, and the outstanding portion of the revolving line of credit, what are the weights of equity and debt in the capital structure (we & wd)? 4. Using the information provided, what is the firms weighted average cost of capital (WACC, ka)? 5. What are the net present value (NPV), internal rate of return (IRR), and Payback Periods for Projects A & B? 6. What decision rules will you use to help Tortuga reach a decision? 7. What are the strengths and weaknesses of each of the evaluation tools? 8. What do you suggest to Tortuga?

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