From the given case information, calculate the firms WACC; then use the WACC to calculate NPV and evaluate IRR for proposed capital budgeting projects with a capital rationing constraint. After you choose the project(s), recalculate the capital structure based on the assumption that the project(s) are implemented and determine if the new capital structure will signal the investors either positively, negatively, or not at all. Write a business report on your findings. Include an executive summary and appendices if applicable. See rubric for specific graded criteria. Click on the attached document for additional information.

|FIN 300 Portfolio Project Choice 2: Case information for business report |North Sea Oil has compiled the following data relative to current costs of its basic sources of external capital, long-term |debt, preferred stock, and common stock equity Source of Capital Long-Term Debt Preferred Stock Common Stock and Retained Earnings Cost 7% 19% 20% Below are the company's target capital structure proportions used in calculating the weighted average cost of capital Target Capital Structure Source of Capital Long Term Debt Preferred Stock Common Stock and Retained Earnings 25 |North Sea Oil has the opportunity to invest in the following projects: Project A $130,000 Project B $85,000 Initial Investment Year 1 Cash Inflows S40,000 S35,000 S30,000 $10,000 $5,000 Cash Inflows $25,000 $35,000 $45,000 $50,000 $55,000 2 4 Using WACC to calculate the NPV and evaluate the IRR, which project should be implemented? (You may also wish to include Payback to further support your answer) |Assuming the project(s) is implemented using equity financing, the capital structure changes to: New Capital Structure after project implementation 20 Source of Capital Long Term Debt Preferred Stock Common Stock and Retained Earnings 20 .60 Calculate the New WACC and briefly discuss in your report if this new WACC and capital structure might signal the market and investors 2550