be 9. You are evaluating a project that will cost $6.61 million. You got the results from your finance department that your firm's Debt to Equity ratio is 0.45, the 15-year bond, which is the only long term debt has a yield to maturity of 11.45% You also have the market information as follows: risk free rate is 1.22%, tax rate is 40%, and market risk premium is 12.36%. In order to estimate your firm's systematic risk, you run a regression on your company stock return (dependent variable) and S&P 500 index return (independent variable). And the regression result is attached. The project will generate after-tax cash flows of $2.88 million per year for 3 years and then it will be terminated. If the flotation cost for equity is 5.55% and the flotation cost for debt is 3.43%. Expected return of equity should (62) _%. WACC should be __(63)__%. Turc cost is $ (64) _million. Net Present Value should be (65) _million Regression Statistics Multiple R 0.82 R Square 0.69 Adjusted R Square Standard Error 4.65 Observations 59 ANOVA SS MS Regression 796.430538 796.430538 36.82379 Residual 57 1232.804716 21.62815292 Total 58 2029.235254 Standard Error Stat P.value Intercept 0.08 0.65 S&P 500 Return 1.35 0.22 1.11E-07 0.68 dr 1 Coefficients 0.13 0.89 6.06 be 9. You are evaluating a project that will cost $6.61 million. You got the results from your finance department that your firm's Debt to Equity ratio is 0.45, the 15-year bond, which is the only long term debt has a yield to maturity of 11.45% You also have the market information as follows: risk free rate is 1.22%, tax rate is 40%, and market risk premium is 12.36%. In order to estimate your firm's systematic risk, you run a regression on your company stock return (dependent variable) and S&P 500 index return (independent variable). And the regression result is attached. The project will generate after-tax cash flows of $2.88 million per year for 3 years and then it will be terminated. If the flotation cost for equity is 5.55% and the flotation cost for debt is 3.43%. Expected return of equity should (62) _%. WACC should be __(63)__%. Turc cost is $ (64) _million. Net Present Value should be (65) _million Regression Statistics Multiple R 0.82 R Square 0.69 Adjusted R Square Standard Error 4.65 Observations 59 ANOVA SS MS Regression 796.430538 796.430538 36.82379 Residual 57 1232.804716 21.62815292 Total 58 2029.235254 Standard Error Stat P.value Intercept 0.08 0.65 S&P 500 Return 1.35 0.22 1.11E-07 0.68 dr 1 Coefficients 0.13 0.89 6.06
