El$-$Fagr company is a manufacturing company. It has three divisions: Smart TVs$,$ White Appliances, and Smart Watches. Each division is independent and has its suppliers, distributors, customers, and competitors. Project $($A$)$ is to introduce a new smart TV$.$ Project $($B$)$ is to produce a smart refrigerator. Project $($C$)$ is to produce a solar energy smartwatch. The initial investment of project $($A$)$ is $$30$ million and it is expected to produce cashflow in the first year of $$8$ million with an annual increase of $7\%$ for $7$ years $($expected life of $7$ years$).$ The initial investment of project $($B$)$ is $$40$ million and it is expected to produce cashflow of $$9$ million for the first $4$ years and $$7$ million for an extra $5$ years. The initial investment of project $($C$)$ is $$45$ million and it is expected to produce a steady cashflow of $$11$ million for $6$ years.

The current capital structure of El$-$Fagr is as follows:

Debt $30\%$

Preferred stocks $30\%$

Common Equity $40\%$

The company would like to keep the current capital structure when it funds the new projects. The company can sell new bonds to fund the selected project. The par value is $$1000,$ the coupon $($interest$)$ rate is $9\%,$ and the selling price is $$985.$ Preferred stocks can be issued at a $$100$ par value, a coupon rate of $10\%,$ thus having a fixed dividend per share Dp $=$ $$10,$ and a selling price of $$97.$ The investment bank that will assist in the selling process will get $$2$ per share as a commission $($flotation cost$).$ The company has $$8$ million as retained earnings that can be used to fund the new project. Also, the company can issue new common stocks to raise the funds necessary to finance the new project. The stock market shows that the rate of return on Treasury bills issued by the government is $6\%,$ and the average rate of return in the market is $15\%.$ The company expects to pay dividends of $$12($D$1)$ per share starting from the first year. However, the company expects to maintain an average annual growth rate of $4\%.$ The current market price of the share is $$80$ and the commission paid to support the sale is $$3($flotation cost$)$ per share. The company depends on the Capital asset pricing model $($C$.$A$.$P$.$M$)$ to calculate the cost of retained earnings for the three divisions, knowing that it uses three betas: $0\mathrm{.}8,1,$ and $1\mathrm{.}4$ according to the risk factors. After conducting a risk analysis for the company$$s divisions, the Division of smart TVs has the average risk, the division of white appliances has the lowest risk, and the division of smartwatches has the highest risk factor. The tax rate is $40\%.$

Required:

$1.$ Calculate the divisional WACC.

$2.$ According to the payback period method, which project$/$projects do you recommend El$-$Fagr Co$.$ to invest in$?$ Now assume that the previous projects were mutually exclusive, what is the best project using the payback method?

$3.$ According to the discounted payback period method, which project$/$projects do you recommend El$-$Fagr Co$.$ to invest in$?$ Now assume that the previous projects were mutually exclusive, what is the best project using the discounted payback method?

$4.$ According to the Net Present Value method $($N$.$P$.$V$),$ which project$/$projects do you recommend El$-$Fagr Co$.$ to invest in$?$ Now assume that the previous projects were mutually exclusive, what is the best project using the NPV method?

$5.$ According to the Internal Rate of Return $($I$.$R$.$R$)$ method, which project$/$projects do you recommend El$-$Fagr Co$.$ to invest in$?$ Now assume that the previous projects were mutually exclusive, what is the best project using the IRR method $($use any available EXCEL template or financial calculator$)?$