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%?

A. 9.95%

B.9.34%

C.10.43%

D.11.38%

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?

A.+$3.24M

B.+$5.63M

C.-$3.73M

D.-$4.52M

Should Apple adopt this new project?

	A.	Yes
	B.	No