$1,000 8.00% Pre tax cost of debt formula is Rate(nper,pmt,-pv,fv)*2 Par value of the bond (fv) Coupon rate Semi Annual coupon payment (pmt)(fv*7.15%/2) Number of remaining till maturity is Number of coupons remaining til maturity (nper) Current price of the bond (pv) $40.00 15 years 30 $1,065.00 Pre tax cost of debt 7.28% Tax rate 35% After tax cost is pre tax cost*(1-tax rate) After tax cost of debt is 4.73% Current price of preference share $95.50 Annual dividend $7.50 Flotation cost is 3% Cost of preference shres (Dividend /price *(1-flotation cost) Cost of preference shares 8.10% Cost of equity is Rf + beta *Rp Risk free rate (RF) 6.00% Beta 1.20 7% Market Risk premium(Rp) cost of equity is 14.40% weight (w) Cost (C) Weighted cost (w*c) 40% 4.73% 0.018929793 Debt Preferred stock 25% 8.10% 0.02024073 0.0504 Common stock 35% 14.400% Total 8.96% WACC of the company is 8.96% ABC is considering a project that has the following cash flow and WACC data. (a) (b) (c) (d) What is the project's NPV? What is the project's IRR What is the project's MIRR? Should the project be accepted? Why? WACC: The result of (1) above Year Cash flows 0 -$1,100 1 $420 2 $380 3 $360 4 $340 5 $320