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Jessie starts up a project on automoibles that costs $ 1 5 0 , 0 0 0 . She will finance $ 1 2 0
Jessie starts up a project on automoibles that costs $ She will finance $ of it by issuing stocks and bonds, and borrow the rest with a loan at an APR of with monthly payments and an upfront cost of $ Specifically, she will finance of $ by stocks and the rest by bonds. The issuing price for stocks is $ per share with semiannual dividend payment of of the stock price. Jessie plans to purchase back of the stocks after two years right after the dividend payment and the stock price is expected to be times of the original price at the end of the two years. For the bonds, she plans to issue a twoyear bond with quarterly coupon payments. The bond price is $ with a face value of $ and an annual coupon rate of The project will earn Jessie a net income of $ per month at the end of each month and she plans to sell the project at a price of $ after two years. She currently has a loan of $ that matures in one year at a rate of EAR with monthly payments. She will use the proceeds and the money raised in this project to pay for this loan. Then, what is the IRR of her investment on this automobile project? points. Please round your answers to the nearest for the IRR, and show the intermediate steps of how you solve the question.
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