Originally, Monash & Co had $10 million in capital of which half is equity. An additional $2 million of equity capital has been injected.
Due to less risk in the international student market, shareholders now need to earn 8% while creditors require a yield of 4%.
Which of the following projects should Monash & Co. choose to send capital on? You can select multiple projects that allow Monash to spend all of it's capital but the combination of projects should earn a greatest return and you cannot over-spend.

Question

Originally, Monash & Co had $10 million in capital of which half is equity. An additional $2 million of equity capital has been injected. 
 Due to less risk in the international student market, shareholders now need to earn 8% while creditors require a yield of 4%.  
 Which of the following projects should Monash & Co. choose to send capital on? You can select multiple projects that allow Monash to spend all of it's capital but the combination of projects should earn a greatest return and you cannot over-spend.

Answer

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

Answer

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

Answer

A new short course which costs $2 million and will yield 9%

Answer

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

Answer

Build a new parking lot for students, costing $10 million with E(R) = 11.5%

Crowdly

Originally, Monash & Co had $10 million in capital of which half is equity. An a...

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