How do the companies make financial decisions based on this? Can you lead me in the direction to do the summary since I am not understanding what this all means?

Total return will be dividend earned plus capital gains.

Capital gain = 125-100 = 25

Dividend = 2

Total return = (25+2) /100 = 27%

Dividend yield = Dividend / Initial Price = 2/100 = 0.02

Capital gains yield = capital gains / Initial Price = 25/100 = 0.25

Total return will be dividend earned plus capital gains.

Assuming FV is 100.

Dividend = 100 * 4% = 4

Capital gains = 120-100 = 20

Total return = (20+4)/100 = 24%

As per CAPM, r = r_f + (r_m- r_f)*beta = 5 + (12-5)*1.2 = 13.4%

WACC = w_e* k_e + w_d * k_d (1-tax) = 0.80 * 0.12 + 0.2 * 0.07(1-0.3) = 10.58%

Floation costs :

125 million will be raised by issuing both debt and equity so that D/E remains 0.75.

D = 0.75E

E + 0.75E = 125

E = 71.43 , D =125- 71.43 = 53.57

Initial cost of the plant will be = 125 + 71.43*0.10 + 53.57*0.04 = 125 + 9.2858 = 134.2858