Financial Review of Southern Textiles Essay Example | Topics and Well Written Essays - 1250 words

Financial Review of Southern Textiles - Essay Example f) Based on the information about potential returns on investments in the first paragraph and information 0n marginal cost of capital ( in parts a, c, and e) how large a capital investment budget should the firm use Project A will increase the firm's processed yarn capacity and has an expected return of 15% after taxes. Project B will increase the capacity for woven fabrics and carries a return of 13.5%. Project C, a venture into synthetic fibers, is expected to earn 11.2% and Project D, an investment into dye and textile chemicals, is expected to show a 10.5 % return. Project A 15% 25 million Project B 13.50% 25 million Project C 11.20% 25 million Project D 10.50% 25 million 100 Project C and D yield lower rates of return than 11.304% . Hence they should not be taken up Investment budget should be for Projects A and B= 25+25=50 million g) Graph the answer determined in part f.