Your uncle Ben has applied for a loan of $240,000 from a local bank, and he thinks he will get a loan. However, he is not confid
ent that he will get the loan for the entire $240,000. Also, he is not certain of the interest rate. Based on his current financial obligations, he is confident the bank will loan him at least $120,000. Also, he thinks the interest rate could be in the range of 12% to 15%. You do not know what interest rate the bank would charge. In this situation, how would you use the chart given above? Explain.
Please find the complete question in the attached file.
Uncle Ben will have to select industrial machinery for customized furnishings, as the NPV of the project have result show to the S loan, such that uncle Ben can gain it if he opts to invest throughout the C loan of just $120,000 from the bank.
In Which only a $240,000 credit by Uncle Ben has also been issued by the bank, it can choose either local furniture exaggerations or regular fabric as Project C and Project S both are positively Verdict.
Explanation: Cost of equity can be defined as the return that the investors demand for bearing the risk of ownership in company's equity shares. It can be computed by using CAPM model which is represented as follows :-
Positive statements is a statement from the field of positive economics that deals with measurement and explanation of economic phenomena, it deals with or studies 'what is' or how the various economics problems of what to produce, how to produce, when to produce and for whom to produce are actually solved. it uses relevant fact for its analysis.
