Bobcat Inc. provides you with the following information about firm's cost of capital.

Tax rate $=24\%.$

$12-$year, $6\%$ coupon, quarterly payment non$-$callable bonds sell for $$980.$ New bonds will be

privately placed with no flotation cost with $$1,000$ par value.

Perpetual preferred stock sells for $$105$ with $4\mathrm{.}5\%$ annual dividend on the par value, $$100$ par value,

The firm plans to issue new common stock with the flotation cost of $7\%.$ Common stock currently

sells for $$240.D_0=$$$5$ and $g=3\%.$

Target capital structure: $40\%$ debt, $10\%$ preferred, $50\%$ common equity.

Assume that Bobcat Inc. is considering project $S$ with the following cash flows. Use WACC from the first

part to complete your capital budgeting analysis.

Bobcat Inc. only accepts a project with less than $2$ years of payback.

Questions

Find WACC $(15$ points$)$

Find NPV$,$ IRR, MIRR, Payback Period, Discounted Payback Period $(15$ points$)$

Should Bobcat Inc. invest in project $S$ based on the capital budgeting criteria for NPV$,$ IRR, MIRR,

Payback Period, and Discounted Payback period? Why? Please make sure to explain the decision

criteria for each method as part of your answer. $(5$ points$)$