Importance of Cost of Capital: Why is the cost of capital important to an organization, and what does it measure?

Meaning of Calculations: How do organizations calculate various costs, and what do these calculations mean to business?

Are taxes necessary for the cost of debt financing to be less than the cost of equity financing?

I need clear answer not picture

Changing the Cost Formula for a Month to the Cost Formula for a Year During the past year, the high and low use of three different resources for Fly High Airlines occurred in July and April. The resources are airplane depreciation, fuel, and airplane maintenance. The number of airplane flight hours is the driver. The total costs of the three resources and the related number of airplane flight hours are as follows:   

Required:

If required, round calculations and answers to nearest dollar.

1. Develop an annual cost formula for airplane depreciation.

Total annual cost of airplane depreciation = ____ x ($__________)

Develop an annual cost formula for fuel.

Total annual cost of fuel = $_________×___________

Develop an annual cost formula for airplane maintenance.

Total annual cost of airplane maintenance = (___________x $___________) + ($__________×_____________)

2. Using the three annual cost formulas that you developed, predict the cost of each resource in a year with 487,000 airplane flight hours.

Total annual cost of airplane depreciation $

Total annual cost of fuel $

Total annual cost of airplane maintenance $

Sage is looking at a new system with an installed cost of $400,800. This cost will be depreciated straight-line to zero over the project's 4-year life, at the end of which the system can be scrapped for $60,200. The system will save the firm $180,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $38,500. All of the net working capital will be recovered at the end of the project. The tax rate is 33 percent and the discount rate is 10 percent. What is the net present value of this project? "

Calculate the capitalized cost of a project that has an initial cost of P4,000,000 and an additional cost of P100,000 at the end of every 10 yrs. The annual operating costs will be P100,000 at the end of every year for the first 4 years and P160,000 thereafter. In addition, there is expected to be recurring major rework cost of P350, 000 every 13 yrs. Assume i =12%

Changing the Cost Formula for a Month to the Cost Formula for a Year

During the past year, the high and low use of three different resources for Fly High Airlines occurred in July and April. The resources are airplane depreciation, fuel, and airplane maintenance. The number of airplane flight hours is the driver. The total costs of the three resources and the related number of airplane flight hours are as follows:

Required:

If required, round calculations and answers to nearest dollar.

1. Develop an annual cost formula for airplane depreciation.

Total annual cost of airplane depreciation =  x ( $ )

Develop an annual cost formula for fuel.

Total annual cost of fuel = $ ×  

Develop an annual cost formula for airplane maintenance.

Total annual cost of airplane maintenance = ( x $ ) + ( $ ×   )

2. Using the three annual cost formulas that you developed, predict the cost of each resource in a year with 484,000 airplane flight hours.

A company is considering investing in a project with an initial cost of $250,000. The cost of capital is 15%. The project will generate $100,000 every year for four years. Calculate the NPV & IRR & determine if they should invest in this project.

Which is lower for a given company: the cost of debt or the cost of equity? Explain. Ignore taxes in your answer. Include a discussion of the risk-return relationship and how this factors into an investor's decision to select and investment for their portfolio.