Question-1: You have the following information about ABC Inc. an auto parts manufacturer. Equity Shares Outstanding Stock Price per Share 20,000,00 0 $40.00 Yield to Maturity on Debt 7.5% Book Value of Interest 320,000 0 Bearing Debt 00 Coupon interest on debty 4.8% Market Value of Debt 290,000,0 00 Book Value of Equity 500,000,0 00 Cost of Equity Capital 14% Tax Rate 35% ABC Inc. is contemplating an average risk investment with an initial investment requirement of $40m and expected annual after tax cash flows of $6.4m in perpetuity. a) What is the internal rate of return on the investment? b) What is the weighted average cost of capital? c) If undertaken, would you expect this investment to benefit shareholders? Explain why or why not JAN