Question 5 (2 points) Quality Printing Inc. wants to estimate its weighted average cost of capital (WACC). . The risk-free rate is 4.50%, the market risk premium is 5.50%, and the stock's beta is 1.20 Bonds mature in 25 years: 8% coupon (paid annually); par value $1,000; price of $1,075. The target capital structure consists of 35% debt and the balance as common equity. The company's tax rate is 40%. What is the company's WACC? a) 7.51% Ob) 8.32% c) 8.76% d) 7.90% Question 6 (2 points) You are evaluating two projects for your company: Apollo and Sputnik. Both projects have normal cash flows, and both are equally risky, therefore both are evaluated with the same WACC, 10%. Project Apollo however has a higher IRR than project Sputnik. Which of the following statements is correct? a) If the WACC falls, then each project's IRR will increase, though not necessarily at the same rate. b) If Apollo has a higher IRR than it must have a higher NPV than Sputnik c) If Apollo has a positive NPV, then Project Sputnik must also have a positive, but smaller NPV. d) If Projects Apollo and Sputnik have the same NPV at the current WACC, 10%, then Project Sputnik, would have a higher NPV than Project Apollo if the WACC used to evaluate the projects declined