QUESTION 3 Your company is considering a new investment project. The investment cost is expected to be $23.50 million and will retum $7.40 million for 5 years in net cash flows. The ratio of debt to equity (D/E) is 2.5 to 1. The cost of equity is 14%, the pretax cost of debt is 6.5%, and the tax rate is 25%. Assuming average risk, what is the appropriate discount rate (WACC)? (Hint: for ease of calculation, you can assign dollar values to debt and equity so that the D/E ratio = 2.5) QUESTION 4 A company wants to have a weighted average cost of capital of 7.8%. The firm has an after-tax cost of debt of 5,4% and a cost of equity of 12%. What debi-equity ratio is needed for the firm to achieve its targeted weighted average cost of capital? (Hint: Wd + Ws = 1) O 1.40 O 1.87 1.75 1.52 O 1.64