QUESTION 24 [Q24-35) Your firm's market value balance sheet is given as follows: Market Value Balance Sheet Excess cash $30M $230M Operating Assets S500M 300M Asset Value $530M Debt + Equity $530M Assume that the you plan to keep the firm's debt-to-equity ratio fixed. The firm's corporate tax rate is 50%. The firm's cost of debt is 10% and cost of equity is 20%. Now, suppose that you are considering a new project that will last for one year. According to your analysis, free cash flows from the project are -$1,000 today (ie. year ) and $1,322.40 one year from today (i.e. year 1). This new project can be viewed as a "carbon copy of the entire firm's existing business. You want to find the NPV of the project using three different DCF methods: WACCIAPV/FTE. What is the firm's WACC? A 10% B.14% 20% D. 16% QUESTION 25 using the WACC. Under the WACC approach, the NPV of the project is obtained by discounting future A Free cash flow B. Free cash flow to debt Free cash flow to equity D. Tax savings QUESTION 26 What is the NPV based on the WACC approach? A. $140 B. $20 C. $160 D. $200 QUESTION 27 What is the firm's unlevered cost of capital? A 16% B. 14% C. 10% 0.20%