Solution-Cost of equity capital, If the company wants to

Cost of equity capital

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Reference no: EM131185872

Managers from different departments in Zenith Trading, a large multinational corporation, have offered six projects for consideration by the corporate office. A staff member for the chief financial officer used key words to identify the projects and then listed them in order of projected rate of return as shown below. If the company wants to grow rapidly through high leverage and uses only 10% equity financing that has a cost of equity capital of 9% and 90% debt financing with a cost of debt capital of 16%, which projects should the company undertake?

Project ID	Projected ROR, % per year
Inventory	30
Technology	28.4
Warehouse	19
Products	13.1
Energy	9.6
Shipping	8.2

Reference no: EM131185872

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Cost of equity capital

Reference no: EM131185872

Reference no: EM131185872

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