2. A company has a target capital structure of 40% debt and 60% equity. You have the following information about the company: Bond with face value of $1,000 pay 10% coupon, mature in 20 years, and sell for $849.54. The coupon is paid semiannually. The company stock beta is 1.2 Risk-free rate is 10%, and market risk premium is 5% The company's tax rate is 40% a. Calculate the company bond's YTM and after-tax cost of debt. b. According to the capital asset pricing model, what's the company's cost of equity? C. Calculate the company's weighted average cost of capital. d. The company proposed a project that requires an initial cost of $18.1 million Management estimates the project will generate cash inflows of $2.46 million a year over its 20-year life. At the end of Year 20, the company plans to sell the project for $1.4 million. Should the company pursue the project at this point in time? Why or why not? 2. A company has a target capital structure of 40% debt and 60% equity. You have the following information about the company: Bond with face value of $1,000 pay 10% coupon, mature in 20 years, and sell for $849.54. The coupon is paid semiannually. The company stock beta is 1.2 Risk-free rate is 10%, and market risk premium is 5% The company's tax rate is 40% a. Calculate the company bond's YTM and after-tax cost of debt. b. According to the capital asset pricing model, what's the company's cost of equity? C. Calculate the company's weighted average cost of capital. d. The company proposed a project that requires an initial cost of $18.1 million Management estimates the project will generate cash inflows of $2.46 million a year over its 20-year life. At the end of Year 20, the company plans to sell the project for $1.4 million. Should the company pursue the project at this point in time? Why or why not