Daniel is the CEO of Motor and Co. (MOT) . The company has 10 million shares of common stock outstanding and 160,000 7 percent annual bonds outstanding, par value $1,000 each. The common stock currently is selling on Stock Exchange at $34 per share. Adam, one of the financial analyst has been tasked to figure out an investment opportunity for the company which Company B has proposed.

The proposal from Company B is to expand into a movie channel business which will cost $200 million to setup and has net positive cashflows (after-tax) from year 1 to 5 of $60 million, $65 million, $45 million, $50 million and $55 million.

Adam has started work on collecting data, and calculated the following details about MOT. The beta of MOT stock is 1.30, and the bonds have 5 years to maturity and are currently selling at par. The market risk premium is 5 percent, T-bills are yielding 5 percent, and current tax rate is 35 percent. Adam has asked you to help him make the presentation to Daniel, and presented you the following questions.

1. What is the MOT cost of Equity right now?
2. What is the MOT cost of debt right now?
3. What are the weights of equity and debt in MOT?
4. What is MOT Weighted Average Cost of Capital right now?
5. Is the proposal from Company B financially viable? How much money would it make?