Calculate: (40 pts) Required returns, market values of stock and bond, WACC, NPV and IRR if Risk free rate is 2%; Return to market portfolio is 11% Beta of debt is .3; Beta of preferred stock is 1.2; Beta of COMMON stock is 2.2 Optimal capital structure is 45% common stock, 5% pfd, and 50% bonds Marginal tax rate is 21 %; Firm's common stock pays a $3 dividend and grows at 9% The preferred stock pays a $5 dividend Firm issues bonds with 15 year maturity and 6% coupon, semiannual interest Project has $4,200,000 Initial Cost Outlay and a 5 year life. The cash flows are: $2,300,000 yr1; $2,100,000 yr 2: $800,000 yr 3; $700,000 yr 4 and $500,000 yr 5. Accept or Reject ???