Using the Capital Asset Pricing Model, what is the required rate of return on equity, Re (cost of equity) for Tortuga?

1. Using the Capital Asset Pricing Model, what is the required rate of return on equity, Re (cost of equity) for Tortuga?

2. What are the weights of equity and debt in the capital structure? (Rd & Re)

3. Using the information provided, what is the firm’s weighted average cost of capital (WACC)?

4. What are the net present value (NPV), internal rate of return (IRR), and Payback Periods for Projects A & B?

5. What decision rules will you use to help Tortuga reach a decision?

6. What are the strengths and weaknesses of each of the evaluation tools?

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