Monash & Co has $10 million in capital of which half is equity. Shareholders need to earn 10% while creditors require a yield of 6%.
Which of the following projects should Monash & Co. choose to send capital on? Select one project only and the best project.

Question

Monash & Co has $10 million in capital of which half is equity. Shareholders need to earn 10% while creditors require a yield of 6%.

Which of the following projects should Monash & Co. choose to send capital on? Select one project only and the best project.

Answer

Build a new parking lot for students, costing $10 million with E(R) = 11%

Answer

Take over of Monash College which will cost $11 million and has a E(R) of 10%.

Answer

New Degree program which costs $4 million to set up and is expected to earn 7.5%

Answer

Build new on-campus student accommodation at $8 million that yields 10%

Answer

A new short course which costs $1 million and will yield 9%

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