10. You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%, and the cost of retained earnings is 16.00%. The firm will not be issuing any new stock. What is its WACC? a. 10.94% b. 8.69% c. 8.26% d. 10.73% 11. Which of the following statements is CORRECT? a. The NPV method assumes that cash flows will be reinvested at the WACC, while the IRR method assumes reinvestment at the risk-free rate. b. The NPV method does not consider all relevant cash flows, particularly cash flows beyond the payback period. c. The NPV method assumes that cash flows will be reinvested at the risk-free rate, while the IRR method assumes reinvestment at the IRR. d. The NPV method assumes that cash flows will be reinvested at the WACC, while the IRR method assumes reinvestment at the IRR. 12. Comell Enterprises is considering a project that has the following cash flow and WACC data, What is the project's NPV? Note that a project's projected NPV can be negative, in which case it will be rejected 1 $450 2 $460 3 $470 WACC: 10.00% Year 0 Cash flows -S825 a $317.37 b. S323.72 c. $266.59 d. $282.46 13. Ingram Electric Products is considering a project that has the following cash flow and WACC data. What is the project's MIRR? Use WACC for both finance and reinvestment rate. WACC: 9.50% 2 Cash flows $800 $350 $350 $350 Year 0 a. 9.97% b. 13.99% c. 10.49% d. 12.95%