They have a magnificent team. These people are always kind and willing to listen to your concerns or issues. Better yet, your assignment is always ready before the time, they usually send you a draft to double-check before they finalize your paper.
North Sea Oil has compiled the following data relative to current costs of its basic sources of external capitals, long-term debt, preferred stock, and common stock equiy.
Source of capital Cost
Long-Term Debt 7%
Preffered Stock 19%
Common Stock and Retained Earnings 20%
Below are the company’s target capital structure proportion used in calculating the weighted average cost of capital.
Source of Capital Target Capital Structure
Long Term Debt .25
Preferred Stock .25
Common Stock and Retained Earning .50
North Sea has the opportunity to invest in the following projects:
Project A Project B
Initial Investment $130,000 $85,000
Year Cash inflows Cash inflows
1 $25,000 $40,000
2 $35,000 $35000
3 $45,000 $30,000
4 $50,000 $10,000
5 $55,000 $5,000
Using the WACC to calculate the NPV and evaluate the IRR, which project should be implemented? (you may also wish to include payback to further support your answer).
Assuming the project(s) is implemented using equity financing, the capital structure changes to:
Source of Capital New capital structure after project implementation
Long term debt .20
Preferred stock .20
Common stock and retained earnings .60
Calculate the New WACC and briefly discuss in your report if this new WACC and capital structure might signal the market and investors
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.Read more
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.Read more
Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.Read more
By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.Read more