1.You have assembled the following data about BigCo from the annual report and accounts and from various analysts reports (in millions)

Book Value
Assets	5 000	Debt	2 000
		Equity	3 000
	5 000		5 000
Market Value
Assets	8 000	Debt	2 000
		Equity	6 000
	8 000		8 000
Liquidation Value
Assets	3 000	Debt	1 500
		Equity	1 500
	3 000		3 000

Calculate the proportions (in %) of debt and equity that you would use for estimating the Weighted Average Cost of Capital.

2.

Given the following facts and using the proportions from Part 1, calculate the after tax WACC for BigCo, showing your workings:

Cost of debt 6%

Cost of Equity 12%

Marginal tax rate 30%

BigCo is planning to invest 25 million in a project that will generate 2.625 million of cash p.a. indefinitely. Using the after tax WACC you have worked out above, calculate the NPV.