Assume the market value of Apples equity, preferred stock, and debt are $6 billion, $2 billion, and $12 billion, respectively. Apple has a beta of 1.7, the market risk premium is 8%, and the risk-free rate of interest is 3%. Apples preferred stock pays a dividend of $4 each year and trades at a price of $40 per share. Apples debt trades with a yield to maturity of 8.0%. What is Apples weighted average cost of capital if its tax rate is 30%?

Answer Question 9 using WACC 9.34%.

Question 9: Apple considers a new project that is a carbon copy of the firms existing business. Once adopted, this new project expects to increase the firms EBIT by $15M over the next five years. (Assume no depreciation, CAPEX, or change in NWC.) If this project requires the initial investment of $45M at time 0, what is its NPV?

Assume the market value of Apple's equity, preferred stock, and debt are $6 billion, $2 billion. and $12 billion, respectively. Apple has a beta of 1.7, the market risk premium is 8%, and the risk-free rate of interest is 3%. Apple's preferred stock pays a dividend of $4 each year and trades at a price of $40 per share. Apple's debt trades with a yield to maturity of 8.0%. What is Apple weighted average cost of capital if its tax 1ate is 30%? A. 9.95% B. 9.34% C. 10.43% D. 11.38% Apple considers a new project that is a carbon copy of the firm's existing business. Once adopted, this new project expects to increase the firm's EBIT by $15M over the next five years. (Assume no depreciation. CAPEX, or change in NWC). If this project requires the initial investment of $45M at time 0, what is its NPV? A. +$3.24M B. $5.63M C.-$3.73M D. -$4.52M