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8. MGM Incorporated is evaluating the following project. MGM estimates a weighted average cost of capital of 10.2%, an after-tax cost of debt of 5.6%,
8. MGM Incorporated is evaluating the following project. MGM estimates a weighted average cost of capital of 10.2%, an after-tax cost of debt of 5.6%, and a cost of retained earnings of 13.3%. Assume MGM Incorporated finances only through debt and equity. In addition, MGM Incorporated has enough retained earnings so they will not have to issue new common stock. a. What is the NPV of the project? (8 points) b. What is the profitability index of the project? (8 points)
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