Qinetiq plc. makes full body scanners for airport security systems. The Transportation Security Administration? (TSA) is considering ordering 100 such machines at a total cost of? $20 million. To ramp up production for the order Qinetiq is considering building a new factory. To evaluate the new factory? project, Qinetiq needs to estimate its cost of capital. Review the following information and answer the questions that follow to help Qinetiq with its analysis.

?

a.??What is the? after-tax cost of debt for Qinetiq? bonds?

b. According to the? CAPM, what is the required return of Qinetiq? shareholders?

c.??What is the weighted average cost of capital? (WACC) for? Qinetiq?

Qinetiq plc. makes full body scanners for airport security systems. The Transportation Security Administration (TSA) is considering ordering 100 such machines at a total cost of $20 million. To ramp up production for the order Qinetiq is considering building a new factory. To evaluate the new factory project, Qinetiq needs to estimate its cost of capital. Review the following information and answer the questions that follow to help Qinetiq with its analysis. Equlty Market price- Shares outstanding- Debt Number of bonds outstanding200,000 Face value Maturity Coupons Market price Tax rate- $1,000 2 years 8% paid annually $1,014.15 32% $50 6 million 0.86 3% 6% Beta- Risk-free rate- Expected returm on market