Question marks$)$

Nurburg Co$.$ has $100,000$ bonds outstanding that are selling at $$980($par value$=$ $$1000).$ Bonds with similar characteristics are yielding $8\mathrm{.}5$ percent. The company also has $900,000$ preferred shares and $2$ million shares of common stock outstanding. The preferred stock sells for $$80$ a share and the annual dividend is $$10.$ The common stock has a beta of $1\mathrm{.}16$ and sells for $$17$ a share. The U$.$S$.$ Treasury bill is yielding $5\mathrm{.}25$ percent and the return on the market is $13$ percent. The corporate tax rate is $38$ percent.

a$)$ What is the firm's weighted average cost of capital? Show your calculation

$(7$ marks$)$

b$)$ What role does the weighted average cost of capital play when determining a project's cost of capital?

$(2$ marks$)$

c$)$ The company is considering a project that is equally as risky as the overall firm. This project has initial costs of $$500,000$ and annual cash inflows of $$180,000,$$$200,000,$ and $$266,000$ over the next three years, respectively. What is the projected net present value of this project? Should the firm take the project?

$(3$ marks$)$

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