$**$IN EXCEL USING FUNCTIONS$**$ Project B has forecasted an outlay of $ $176,000$for the equipment and an additional $ $40,000$for installation. The firm will see an increase of $ $25,000$in inventories immediately to undertake this project, but they will also see an immediate increase in accounts payable of $ $25,000.$There will be a return of the net working capital change at the end of the fourth year. Also, at the end of the fourth year the firm will sell the asset for a salvage value of $ $45,000.$The firm has a variable cost of operations that is equivalent to $70\%$of sales, a sales price of $ $2\mathrm{.}50$with no assumed annual inflation, and a tax rate of $26\%.$Depreciation will fall into the $3-$ year MACRS class. Unit sales are forecast to be $75,000$ ; $90,000$ ; $90,000$ ; and $100,000$respectively for the first four years. Both projects are considered to have similar risk. The firm has a beta of $1\mathrm{.}10$with the risk $-$ free rate of $5\%$and a market risk premium of $6\%.$Dividends are forecasted to be $ $1$with a current price of $ $15$and a growth rate of $4\%.$The bond $-$ yield $-$ risk premium is $3\%.$Current semiannual bonds are priced at $ $800$with $25$years to maturity and a Capital Budgeting coupon rate of $8\%.$The firm has no notes payable. Preferred stock has a face amount of $ $100$with a $7\%$dividend rate and are currently selling for $ $98$each$.$ The firm can fund this asset growth with reinvested earnings, so they would not have to sell new securities $.$The firm currently has $40,000$bonds outstanding at the $ $1,000$par value for use with book value and market value calculations. It also has $100,000$shares of preferred stock outstanding at the stated par value for the same use. The firm has $4,000,000$shares of common stock outstanding with the accountants indicating a book value of $ $30,000,000($ just giving the total here $)$of all common stock accounts combined. Management has just set a target capital structure of $30\%$debt; $10\%$preferred stock; and $60\%$common equity. Project Questions: $1.$Calculate the weights if the firm used book values? Market values? Target values? Next discuss which approach is theoretically most sound and explain why for this particular scenario for this particular firm. $2.$Calculate the weighted average cost of capital using each of the three approaches in # $1.$Discuss your answers and highlight the rate you will use in the future questions based on your reasoning. $**$IN EXCEL USING FUNCTIONS$**$