Company Y market value of debt is $6 million. Company Y has 300 000 shares outstanding and current share price is $22. The cost of equity is 15%. Company tax rate 35%.

a)What is the market value of equity?

b) What is the debt to equity ratio?

c)If companys weighted average cost of capital (WACC) is 10%, what is the pretax cost of debt?

d) Company Y has an investment project, which cost $2 million and offers cash flow $1,5 million per year for next six years. Assume that the project has the same risk as the companys core business. Calculate the NPV. Would you accept this project?