Boeing is considering two projects as part of their capital budgeting process. Here are the cash flows for each project:

• Project A has an initial outlay of -300 at time 0, a cash inflow of 50 at time 1, and cash inflow of 100 at time 2, a cash inflow of 150 at time 3, and a cash inflow of 200 at time 4.
• Project B has an initial outlay of -300 at time 0, a cash inflow of 200 at time 1, and cash inflow of 100 at time 2, a cash inflow of 80 at time 3, and a cash inflow of 60 at time 4.

In addition, Boeing has the following financial information:

• The companys target capital structure is 50% debt, 5% preferred, and 45% Equity
• The firms tax rate is 30%, and their 10-year bond with an annual coupon on 8%, a face value of $1,000, has a current market price of $1,100.
• Boeings current preferred stock has a dividend of $110 and a current price of $980.
• The risk-free rate is 5%, and the market risk premium is 8%. Boeings common stock has a beta of 1.8.

Questions

1.a. What is Boeings Weighted Average Cost of Capital (WACC)?

1.b. What is the NPV and IRR for project A and project B?