TBS Corporation, a well known holding company, currently have the following weighted cost of capital, debt financing 3.20%, Preferred stock 3.40%, and a Common stock of 9.60%. Through these sources of funds, the company has a total of $800,000 new and available funds that can be invested by the company. Below are the possible investment options of the company together with the internal rate of return and the initial required investments.

           

            Investment                   IRR                               Initial Investment

            ABS                              19%                                     $200,000

            BDO                             15                                          300,000

            CPG                             22                                          100,000

            DD                               14                                          600,000

            EDC                             23                                          200,000

            FPH                              13                                          100,000

            GMA                            21                                          300,000

            HLCM                           17                                          100,000

            IFM                               16                                          400,000   

 

A. Given the different information, which of the above investments should TBS Corporation invest the $800,000? Discuss why you choose such investments.

Answer rating: 100% (QA)

The TBS Corporation should invest the 800000 in the ... View the full answer