Question 9

"Firm UVW has a face debt value of $60 Million USDs trading at 89% with a pre-tax weighted cost of 9%. Firm UVW's common equity for the year was valued at $150 Million of USDs and preferred equity for $10 Million of USDs. The Preferred equity rate was calculated to be 29%. However, the common equity was to be calculated using CAPM approach, with a 2% risk free rate and a 8.5% market risk premium rate, assuming a Beta of 1.5. If the tax rate is 39%, what is Firm UVW s WACC? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05"

QUESTION 10

"Continue considering Firm UVW. Suppose Firm UVW is considering investing in a new project of urban development. The cost of the project is $7 Millions of USD. Firm UVW expects that the non-incremental yearly cash flows from the project are $3 Million of USD for the next five years; e.g. that is $3 Million of USD each year. Using the calculated WACC in the previous question, what is the Net Present Value (NPV) of the project? Note: Express your answers in strictly numerical terms. For example, if the answer is five million dollars, write 5000000 as an answer."