FIN 100 Sophia Final Milestone (FIN100)

Company A Company B Market Value of Equity $700,000 $900,000 Market Value of Debt $300,000 $200,000 Cost of Equity 8% 10% Cost of Debt 1.5% 3% Tax Rate 30% 25% Based solely on their current weighted average cost of capital, which company should pursue an investment opportunity with an expected return of 7%? • Only Company B • Both Company A and Company B • Only Company A • Neither Company A nor Company B 2 Preparing a cash flow forecast helps a company to avoid __________. • opportunit...