Write the calculation process and results. Your answers should be in full sentences and 1-3 paragraphs each.

 Write the calculation process and results.

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Your answers should be in full sentences and 1-3 paragraphs each. 1. Assume the manager of ABC Corp makes the following statement: "To lower my cost of capital, I've decided to no longer buy equipment with debt financing anymore. Instead, I will only lease equipment - therefore I have no bank loans and my cost of debt is now zero. More so, since ABC Corp is privately held, and I personally own all the equity - ABC Corp cost of capital is now also zero!". Is the manager correct in his thinking? 2. At an executive meeting, a CFO claims that the NPV of a proposed factory expansion is very high - an expected NPV of 1 billion dollars. Another executive counter the CFO's analysis, by stating that the payback period is too long with estimates of approximately 50 years. If you were also at this executive meeting, what would be your analysis on these differing viewpoints? 3. Intuitively, what is the discount rate, why do we need it, and how do we choose the appropriate number? Your answers should be in full sentences and 1-3 paragraphs each. 1. Assume the manager of ABC Corp makes the following statement: "To lower my cost of capital, I've decided to no longer buy equipment with debt financing anymore. Instead, I will only lease equipment - therefore I have no bank loans and my cost of debt is now zero. More so, since ABC Corp is privately held, and I personally own all the equity - ABC Corp cost of capital is now also zero!". Is the manager correct in his thinking? 2. At an executive meeting, a CFO claims that the NPV of a proposed factory expansion is very high - an expected NPV of 1 billion dollars. Another executive counter the CFO's analysis, by stating that the payback period is too long with estimates of approximately 50 years. If you were also at this executive meeting, what would be your analysis on these differing viewpoints? 3. Intuitively, what is the discount rate, why do we need it, and how do we choose the appropriate number?

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1 The managers statement regarding lowering the cost of capital by no longer using debt financing for equipment purchases and assuming a zero cost of ... View the full answer