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Table B:

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Table B: Cost of Capital by Amount Raised
Block of Funds
(in Millions) Amount of Funds
in Block Cost of Capital for Block
First Block of Funds $500 10%
Second Block of Funds $400 11%
Third Block of Funds $300 12%
Fourth Block of Funds $200 13%
Fifth Block of Funds $100 14%
Sixth Block of Funds $100 15%

3. Compare the three investments below in terms of their riskiness. What is the best way to evaluate the riskiness of an investment given the information you have on them?

Project Expected Return Standard Deviation
A $100,000 $25,000
B $200,000 $40,000
C $50,000 $20,000

4. Find the derivatives of each of the following functions, and their points of maximization or minimization if possible.

a. TC = 1500 - 100 Q + 2Q2
b. ATC = 1500/Q - 100 + 2Q
c. MC = -100 +4Q
d. Q = 550 – 0.5 P
e. Profits = -1500 +1200 Q – 4Q2
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10. Compare the three investments below in terms of their riskiness. What is the best way to
evaluate the riskiness of an investment given the information you have on them?
Project Expected Return...

This question was asked on Jan 16, 2013 and answered on Jan 16, 2013.

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