This is the Balance sheet for Xenophobic Optics. The company is undertaking Project Telescope which it plans to handle from its own resources. The CFO needs the Weighted Average Cost of Capital (WACC) to determine whether it is worthwhile. The cost of debt is 10% on average, and the corporate tax rate is 40%. The proposed project is in the next question. The return on equity is in question 1. What is the WACC of this company? Beta = 1.5 and Expected return = 18 %

Std Deviation of the market 6% Std deviation of Xenophobic Optics 12% Covariance of ABC and market - 54 T-Bill rate 3% Expected return of Market 13%

Xenophobic Optics December 31, 2019 Assets Liabilities Cash Accounts Receivable Inventory 2,500 7,000 4,000 Bank Operating Line Payables Loan on Equipment Long Term Loan 4,000.00 1,000.00 5,000.00 10,000.00 Total Current Assets 13,500 Total Liabilities 20,000.00 Equipment Goodwill 12,500 4,000 Shareholder's Equity Total Long Term Assets 16,500 Capital stock Retained earnings 4,000.00 6,000.00 Total Assets 30,000 Total Shareholder's Equity 10,000.00 Total Shareholder's Equity and Liabilities 30,000.00