The U. S. Office of Management and Budget (OMB) recommends that the governmentuse different discount rates for public investments than for the sale of government as-sets. For public investments, the OMB suggests a discount rate that reflects the his-torical pretax rate of return on private investments, while for the sale of governmentassets, the OMB recommends using the cost of government borrowing as a discountrate. Why might the OMB make this distinction? That is, (a) what is the social value created by capital investment, and what is the cost? (b) What is the social value created by selling existing assets, and what is the cost?

If a firm plans to issue new stock, flotation costs (investment bankers' fees) should not be ignored. there are two approaches to use to account for flotation costs. the first approach is to add the sum of flotation costs for the debt, preferred, and common stock and add them to the initial investment cost. because the investment cost is increased, the project's expected return is reduced so it may not meet the firm's hurdle rate for acceptance of the project. the second approach involves adjusting the cost of common equity as follows: . the difference between the flotation-adjusted cost of equity and the cost of equity calculated without the flotation adjustment represents the flotation cost adjustment. quantitative problem: barton industries expects next year's annual dividend, d1, to be $1.90 and it expects dividends to grow at a constant rate g = 4.3%. the firm's current common stock price, p0, is $22.00. if it needs to issue new common stock, the firm will encounter a 6% flotation cost, f. assume that the cost of equity calculated without the flotation adjustment is 12% and the cost of old common equity is 11.5%. what is the flotation cost adjustment that must be added to its cost of retaine

What are the general categories of capital budget scenarios? describe the overall decision-making context for each.

What are two benefits of consumer programs