Part A

Compute the Internal Rate of Return for a project with the following cash flows:

Year	Cash Flow
0	($2,000)
1	$500
2	$400
3	$400
4	$1,500

	7%
	12%
	8%
	40%

Part B

XYZ has a capital structure of 40% debt and 60% equity. XYZs levered beta is 2 and its tax rate is 40%. XYZs unlevered beta is closest to:

Question 2 options:

	3.2
	1.4
	2.8
	1.1

Part C

Compute the cost of preferred stock for a firm that can issue new preferred stock at a price of $50 per share that will have a $100 par value and a 4% dividend.

	2%
	50%
	8%
	4%