1. Jack is thinking about buying shares in ABC Car Company, Inc. However, Jack can’t decide if he should buy shares of common stock or shares of preferred stock. What are some of the things he should consider in order to help him determine the type of share he should buy?
2. Explain the differences and similarities between net present value (NPV) and the profitability index.
3. What are some advantages of the subjective approach to determining the cost of capital and why do you think that approach is utilized?