Use the net present value -NPV- method of capital budgeting to evaluate the following project.

Q-1 Use the net present value -NPV- method of capital budgeting to evaluate the following project. Should the company accept/reject the project? Why? Initial outlay (cash outflows) -40000 Cash inflow Total Debt Year 1: $20000 Year 2: $15000 Year 3: $6200 $300000 Cost of debt 7% Total equity $500000 Cost of equity 12% Q-2 Use the information shown in the table Economic Condition Weak Moderate Good Outcome 180 260 340 Probability of outcome .3 .5 .2 1.1 what is the expected value? 1.2 calculate the variance. 1.3 calculate the standard deviation. 1.4 calculate the coefficient of variation. Q-3 what is Beta? Calculate the Beta for Extra and SADAFCO companies. Explain your answer carefully? Which company’s stock is riskier? Q4- use a line graph to show the stock price for SABIC and SADAFCO with the market index “5 years” then describe the graph and what is your conclusion. In the conclusion, give your opinion about the correlation and how the company move in comparison to the market index? If they move together why and if they move inconsistently why? Think about the volatility and beta. In addition, is it good to invest in both companies to diversify?

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