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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
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%. 1-a.Complete the table below to determine the WACC for each of the two capital structure scenarios. 1-b. Which capital structure shall Mr. Johnson choose to fund the new project? 2-a. What are the WACC (restated from Part 1), NPV, IRR, and payback years of this project?
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