Cement LTD, a private contracting and construction company, is issuing public capital for the first time and it has to figure out its capital costs (WACC). As I'm sure you've already guessed, this is where you come in. With Q.E. still having an effect, base interest rates are only 4%, and Cement expects it will be charged a 4% premium on this rate when it raises $5 million in 10-year debt. There were 5 owners, with an equal share in the firm, of Cement who owned the firm in a special type of preferred stock, which pays a $150,000 dividend to each owner at the end of each year, and these owners demand a 10% return on their investment in this form. Cement will also issue common equity shares when it issues debt. In order for the original owners to maintain a significant vote, Cement will raise common equity of the same total market value as the preferred equity through 1,000,000 shares. The next year, Cement will issue a $.50 dividend on common equity which will grow by 2% a year. Cement has a 25% tax rate. Calculate the WACC using the above information. Hint: start with finding the price per preferred stock and then the total market value of preferred stock. This will then help solve for the common equity portion.

I want an answer to just the last part of the question that is

"Are there any circumstances under which Cement would take on a project which earns less than the WACC? Given an example."

P.S. I have solved it already just answer the last part.

B o FIN6010-Fall 21 - Problem Set - (insert your name here) (1) - Excel (Product Activation Failed) Review View Tell me what you want to do... File Home Insert Page Layout Formulas Data It * Cut Calibri M 11 - AA Wrap Text General ET E Copy H Sign in Share AutoSum - Fill Sort & Find & Clear Filter - Select Editing Paste BIU - 2013 A Merge & Center Format Painter 6.000 .00 0 %) Insert Delete Format Conditional Format as Cell Formatting Table Styles Styles Clipboard Font Alignment 5 Number Cells H90 : fac B D E F G H K L $ 5,000,000 100 Base 4% 101 Premium 4% 102 Rd 8% 103 Tax 25% 104 105 Total Market Value of Cement 106 $ 20,000,000 107 Preferred/Total 0.375 108 Common/Total 0.375 109 Debt/Total 0.25 110 Sum of Weights 1.00 111 Do these weights add up to 1? YES 112 113 WACC 9.00% 114 115 116 Are there any circumstances under which Cement would take on a project which earns less than the WACC? Given an example. 117 118 If there are debts on company 119 120 121 122 Project 1 Pro-Forma Time Value of Money Discounted Cash Flow Bond Valuation & Duration Stock Valuation Risk a ... Ready Calculate + 100 % Type here to search j w x] Et 14 2:44 am 19/09/2021 BS FIN6010-Fall 21 - Problem Set - (insert your name here) (1) (Protected View] - Excel (Product Activation Failed) Data Review View Tell me what you want to do... o Sign in Share File Home Insert Page Layout Formulas PROTECTED VIEW Be carefulfiles from the Internet can contain viruses. Unless you need to edit, it's safer to stay in Protected View. Enable Editing X D59 X fic A B D E F G H 1 J K L 85 86 Preferred Market Value Preferred 87 Price $ 1,500,000 $ 7,500,000 88 Dividend $ 150,000 89 Rp 10% 90 Shares 5 91 92 Common Market Value Common 93 Shares 1,000,000 $ 7,500,000 94 Price $ 7.5 95 Re 8.67% 96 Dividend $ 0.50 97 G 2% 98 99 Debt Market Value Debt 100 Base 4% $ 5,000,000 101 Premium 4% 102 Rd 8% 103 Tax 25% 104 105 Total Market Value of Cement 106 $ 20,000,000 107 Preferred/Total 0.375 108 Common/Total 0.375 109 Debt/Total 0.25 110 Sum of Weights 1.00 1 ... | Stock Valuation Risk and Return Portfolio Return Investment Criteria Capital Investment Project Analysis WACC + Ready + 100 % Type here to search 1 w x] Et 2:42 am 19/09/2021 14