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1) What are the advantages and disadvantages of the existing financing options: 50% mortgage financing and 50-50 share ownership?
2) If Li requires a rate of return of 6% on equity investment; what is the cost of capital of the project if she decides to keep a capital structure of 50-50?
3) What are the following financial ratios on both financing options, considering the three case scenarios, and no growth?
a. Net Income
b. Total Cash Flows
c. ROE
d. Accounting and Financial Break-even Points
e. Payback Period
f. NPV
4) What should be Li’s decision on this project?

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