Project #37234 - Finance

 

Seafield's cost of capital: 10%
Initial Cost: $83.6 million
Project life: 12 years
Cash flow in years 1-2: $18.8 million

a. The chapter opener reported that the project had an NPV of $66 million and an internal rate of return of 20%. From those two facts alone, what can you conclude about Seafield's cost of capital? (Hint: Is it more than or less than 20%?)
b. Given the information above about the project's initial cost and subsequent cash flows as well as the information from part a, can you estimate Seagate's cost of capital?

Subject Business
Due By (Pacific Time) 08/08/2014 11:00 am
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