1.Marvel uses 25% common stock and 75% debt to finance their operations. The after-tax cost of debt is 6 percent and the cost of equity is 15 percent. The management of Marvel is considering an expansion project that costs $1.0 million. The project will produce a cash inflow of $55,000 in the first year and $175,000 in each of the following 10 years (i.e., $175,000 in years 2 through 11). What is the WACC and should Marvel invest in this project?

2.Marvel's cost of common equity capital is 17 percent and its cost of debt capital is 10 percent. If the firm is financed with $150,000,000 of common shares (market value) and $650,000,000 of debt, what is its after-tax weighted average cost of capital? Marvel's tax rate is 40 percent.