11.You are given the market values of CHARs capital structure as follow: $52 million in total common equity, $20 million in debt, and $8 million in preferred stock. CHARs tax rate is 40%. After-tax cost of debt is 7%, cost of preferred stock is 5.5%, and cost of common equity is 15%. If CHARs book value capital structure weights are 60% common equity, 25% debt, and 15% preferred stock, what is CHARs WACC?(5 Points)

1. 11.35%
2. 11.57%
3. 10.87%
4. 12.05%

12.Braun Industries has a WACC of 10% and is considering an investment project that has the following cash flows:

Year Cash Flow

0 - $600

1 $400

2 $300

Whats the projects NPV given that WACC is 10%?(3 Points)

1. $100.00
2. $199.00
3. $284.29
4. $11.56

13.Whats the projects NPV if WACC is 20%?(3 Points)

1. -$58.36
2. $312.00
3. $191.66

14.Based on the calculated NPVs in questions 12 and 13, whats the estimated projects IRR using interpolation method?(5 Points)

1. 11.65%
2. 9.00%
3. 13.50%
4. 10.00%

15.Should the project be accepted based on IRR? Why?(3 Points)

1. Yes, because IRR is greater than zero
2. Yes, because IRR is greater than WACC
3. No, because IRR is less than WACC
4. No, because IRR equals to WACC

16.Should the project be accepted based on NPV? Why?(3 Points)

1. Yes, because cash inflows are greater than cash outflow
2. Yes, because NPV is greater than zero
3. Yes, because NPV is greater than cash outflow