Question 10 (2.5 points) Consider the following scenario (the given information is the same as in the previous question): Suppose a company has 100 million common shares outstanding, and each share sells for $20. We have estimated that the shares have a beta of 1.2, the risk- free rate is 3%, and the expected market return is 8%. The marginal tax rate for this company is 21%. The company also has $2 billion of bonds outstanding and the yield to maturity on these bonds is 5%. The company has a target capital structure of 60% equity and 40% debt. It does not and will not issue preferred stocks in the future. Suppose the company has the flotation costs of 8% for equity and 4% for debt, the company needs to issue _____ in new securities in order to finance a $70 million project. OA) $76.15 million B) $72.92 million C) $74.15 million D) $74.79 million Question 12 (2.5 points) Dove company has an overall WACC of 8%. Its assets vary widely in risk, and the company evaluates low-risk projects at the cost of 6%, average projects at 8%, and high-risk projects at 10%. The company is considering the following projects: Project A: High-risk with an expected return of 8% Project B: High-risk with an expected return of 12% Project C: Average-risk with an expected return of 7% Project D: Low-risk with an expected return of 4% Project E: Low-risk with an expected return of 8% Which set of the projects should the company accept? A) B and E only B) A and E only OC) A, C, and D only D) B, C, and D only