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Ramco industries choose the best asst from the following two alternatives assets for investment purpo...

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Ramco industries choose the best asst from the following two alternatives assets for investment purpo investment is decided to be $110 million mobilized from both debt and equity sources in equal propoi stock is 0.94, market risk premium 6% and risk free rate at 5% and tax rate applicable to the firm at 409 12%. a) Determine the cost of capital applicable to evaluate the assets b) Apply NPV, IRR & Pl methods to evaluate the proposals and suggest the best one. Analyse your resi Investments: Investment Year Asset-A Asset-B 0 55 110 3 55 NIL Cash Flows after Tax (CFAT) Year CFAT- Asset-A ($Million) CFAT-Asset-B ($Million) 1 15 10 2 30 16 3 45 28 4 48 46

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