Previous Page Next Page Page 17 of 19 Question 17 (15 points) Qualcomm is looking to invest in a project. In order to do this, they require capital and they are concerned about how much it will cost to raise this capital. Currently, the company has 74.65 million Class A shares and 350.53 million Class B shares, they are priced at $32.12 and $18.12 per share respectively. The company also has 3 types of bonds still outstanding a bond with a YTM of 3.00% at a market value of $1265.35 million, another with a YTM of 4.85% with a market value of $1554.60 million, and finally a third with a YTM of 10.00% with a market value of $2095.30 million. The risk free rate of the market is 6.54%, and the market risk premium is 6.98%. The beta of Qualcomm is 1.50 and the tax rate is 36.10%. What is the company's cost of capital? Part B: the three projects are expansion projects that require varying investment totals. The first project costs $335000.00 and would generate a yearly profit of $50000.00 and will last for 9.00 years. The second project costs $500000.00 but will generate a yearly profit of $92000.00 and will last for 11.00 years. Finally, the third project will cost $698000.00, generate a yearly profit of $104000.00 and vill last for 16.00 years. The CFO wants your help in determining which project to choose. Which project is the best investment for Qualcomm Paragraph BI U