Answer Q1-4

Given the following cash flows:

Year	0	1	2	3
CF	-3,500	600	1,000	Cash flow will grow at a constant rate g=6%

We choose the following capital structure plan:

	Debt	Equity
Plan	30%	70%

Equity Benchmark:

The unlevered beta is 2, tax rate is 40%. Market Return is 16%, risk-free rate is 3%.

Debt Benchmark:

Par:100, Annual Coupon: 6%, 10-year to maturity, Selling at $88.43

Q1) What is the before-tax cost of debt

		a) 7.7%
		b)8.5%
		c)6.3%
		d)6.9%

Q2) What is the cost of equity?

		a)29%
		b)35.69%
		c)37.28%
		d)28.14%

Q3) What is the WACC?

		a)33.14%
		b)21.69%
		c)26.37%
		d)17.28%

Q4) What is the NPV of the project?

		a)1728.42
		b)917.53
		c)2231.98
		d)860.42