Exercise 3 The company ABC presents the following information Debt Information The pretax cost of debt is 8%. Tax rate = 40% Equity Information 1,000,000 shares $20 per share Beta 1.20 Market risk premium = 9% Risk-free rate 5% The financial leverage ratio is 0.5. What is the cost of equity? 2- What is the after-tax cost of debt? What are the capital structure weights? 4- What is the WACC? The company ABC is considering a project that will cost $3 million. This project generates constant cash flows of $550,000 per year for 10 years. The flotation cost for equity is 5% and the flotation cost for debt is 3%. What is the NPV for the project after adjusting for flotation costs? 5- Calculate the NPV by ignoring the floatation costs and after accounting the flotation costs. 6What is your conclusion