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8. Given the following information, what is the firm's weighted average cost of capital? Weight of debt weight of equity 28%; 72%; cost of equity
8. Given the following information, what is the firm's weighted average cost of capital? Weight of debt weight of equity 28%; 72%; cost of equity 12%, cost of debt before tax 9%; tax rate 35% A) B) 10.23% 11.57% C) D) 11.86% 12.09% Use the following information to answer next three questions You are considering the purchase of an investment that would pay you $15,000 per year for Years 1-4, $12,900 per year for Years 5-7, and $9,500 per year for Years 8-10. If the investment costs you $90,000 and you require a 12 percent rate of return: 9. What is the project's NPV? According to NPV rule, should you take this investment? A) -$14,428, No B) $8,879, Yes C) $9,905, Yes D) $12,239, No 10. What is the project's Profitability Index? According to PI rule, should you take this investment? A) 0.84, No B) 0.92, No C)15, Yes D) 1.25, Yes 11. What is the project's Payback period? If you require a payback of 5 years, should you take this investment? A) B) 4.80 years, Yes 6.32 years, No C) D) 7.90 years, No 8.12 years, No
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