Part 1 Peter Johnson, the CFO of Homer Industries, Inc is trying to determine the weighted Cost of Capital (WACC) based on two different capital structures under consideration to fund a new project. Assume the company's tax rate is 30%. Component Scenario 1 Scenario 2 Cost of Capital Tax Rate Debt $5,000,000.00 $2,000,000.00 8% 30% Preferred Stock 1,200,000.00 2,200,000.00 10% Common Stock 1,800,000.00 3,800,000.00 13% Total $8,000,000.00 $8,000,000.00 1-a. Complete the table below to determine the WACC for each of the two capital structure scenarios. (Enter your answer as a whole percentage rounded to 2 decimal places (e.g..3555 should be entered as 35.55).) Tax Rate 30% Scenario 2 Scenario 1 Scenario 1 Scenario 2 Weighted Cost of Weight % Weighted Weight % Cost Cost Capital Debt 0.6396 0.25% 3.50% 1.40% 8% Preferred 0.15% 0.28% 1.50% 2.75% 10% Stock Common 0.23% 0.48% 2.93% 8.18% 1396 Stock Total 1.0196 1.00% 7.9396 10.33% "Red text Indicates no response was expected in a celor a formule-based calculation is incorrect; no points deducted 1-b. Which capital structure shall Mr. Johnson choose to fund the new project? Scenario 1 Scenarlo 2 Part 2 Assume the new project's operating cash flows for the upcoming 5 years are as follows: Initial Outlay Inflow year 1 Inflow year 2 Inflow year 3 Inflow year 4 Inflow year 5 WACC Project A $ -8,000,000.00 1,020,000.00 1,850,000.00 1,960,000.00 2,370,000.00 2,550,000.00 2-a. What are the WACC (restated from Part 1), NPV, IRR, and payback years of this project? (Negative values should be entered with a minus sign. All answers should be entered rounded to 2 decimal places. Your answers for WACC and IRR should be whole percentages (e.g..3555 should be entered as 35.55).) 2-a. What are the WACC (restated from Part 1), NPV, IRR, and payback years of this project? (Negative values should be entered with a minus sign. All answers should be entered rounded to 2 decimal places. Your answers for WACC and IRR should be whole percentages (e.g..3555 should be entered as 35.55).) WACC (from Part 1) NPV 7.939 $ -419,066.00 8.00% IRR Payback Method 4.00 2-b. Shall the company accept or reject this project based on the outcome using the net present value (NPV) method? Project A should be accepted Project A should be rejected