Arden Corporation is considering an investment in a new project with an unlevered cost of capital of 9.0 %. Arden's marginal corporate tax rate is 40%,and its debt cost of capital is 5.0 %.

a. Suppose Arden adjusts its debt continuously to maintain a constantdebt-equity ratio of 0.5. What is the appropriate WACC for the newproject?

b. Suppose Arden adjusts its debt once per year to maintain a constantdebt-equity ratio of 0.5. What is the appropriate WACC for the new projectnow?

c. Suppose the project has free cash flows of $ 10.0million peryear, which are expected to decline by 2.0 %per year. What is the value of the project in parts (a)and (b)now?

a. Suppose Arden adjusts its debt continuously to maintain a constantdebt-equity ratio of 0.5. What is the appropriate WACC for the newproject?

If Arden adjusts its debt continuously to maintain a constantdebt-equity ratio of 0.5, the appropriate WACC for the new project in this case is ??%. (Round to three decimalplaces.)

b. Suppose Arden adjusts its debt once per year to maintain a constantdebt-equity ratio of 0.5. What is the appropriate WACC for the new projectnow? If Arden adjusts its debt once per year to maintain a constantdebt-equity ratio of 0.5, the appropriate WACC for the new project in this case is ??%. (Round to three decimalplaces.)

c. Suppose the project has free cash flows of $ 10.0million peryear, which are expected to decline by 2.0 %per year. What is the value of the project in parts (a) and (b) now? If the project has free cash flows of $ 10.0million peryear, which are expected to decline by 2.0 %peryear, the value for part (a) is $?? million. (Round to two decimalplaces.)

If the project has free cash flows of $ 10.0million peryear, which are expected to decline by 2.0 %peryear, the value for part (b) is $??million.(Round to two decimalplaces.) Enter your answer in each of the answer boxes.