Analysis of Capital Investments

Cost of Capital
Knowledge Center

Forum
Isabel Fuentes
Student (University), United States

Analysis of Capital Investments

Should a firm accept the independent projects described below? Why or why not?
A) the firmīs cost of capital is 10 % and the estimated internal rate of return of the project is 11 %.
B) a capital investment requires a $150,000 initial investment. The firmīs cost of capital is 10%, and the present value of the expected cash inflows from the project is $148,000.

  Frans Mandla Motau, South Africa
 

Analysis of Capital Investments

The firm should accept the project that has the internal rate of return of 11% which is higher than the cost of capital.
The firm should not accept the project with the NPV that is less than the intial investment amount.

 

More on Cost of Capital:
Summary
Forum
What are the Effects of Inflation for Companies?
👀Analysis of Capital Investments
Cost of retained earnings
Cost of Capital ( Equity Only)
🔥What is the Difference Between Cost of Capital and Weighted Average Cost of Capital?
Special Interest Group

Do you have a keen interest in Cost of Capital? Become our SIG Leader

Cost of Capital
Knowledge Center



About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
Đ 2022 12manage - The Executive Fast Track. V15.8 - Last updated: 3-7-2022. All names ™ of their owners.