Question 1. A firm has $ 4 millions in total assets and 2.2 millions in equit. How much of its $500,000 capital budget should be debt-financed to retain the same debt-equity ratio?
Question 2. A firm has an unused machine that originally cost $75,000, has a book value of $20,000 and is currently worth $25,000. Ignoring taxes, the correct opportunity cost for this machine in capital budgeting decisions is?