Taiwan Semiconductor Manufacturing Company, Limited (TSMC) was founded in 1987 in Taiwan. It is listed on the New York Stock Exchange (NYSE: TSM). TSMC is the world's most valuable semiconductor company. TSMC makes microchips for customers with process nodes from 2 microns to 7 nanometers. Recently, the company attracts media attention as U.S. tightens export controls over crucial chip supplies.

a) Now, suppose TSMC issues a 10% annual coupon bond that currently sells for $915.50. The par value of the bond is $1,000. The bond price will increase to $919.5 in the next year. Assume that YTM does not change from year 0 to year 1. Please find the current yield and the capital gain yield of the bond and determine the YTM of the bond.

b) TSMC is considering building a factory making 5-nanometer transistor chips in Arizona, U.S. The estimated cash flows generated by the advanced chip plant would be -2,400 in year 0, 700 in year 1, 800 in year 2, 1,000 in year 3, 600 in year 4, and 800 in year 5. All numbers are in thousand U.S. dollars.TSMC now has a debt to equity ratio that equals 2:1. Its target debt to equity ratio is 1:4. Suppose TSMC does not have preferred stocks. Its corporate tax rate is 25%. Use the cost of equity and cost of debt calculated from (a) and (b), to compute WACC and MIRR. According to the MIRR method, do you think TSMC should invest in the new factory?