Total annual purchases $365,000. Purchases credit terms: net 30 days. Receivables credit terms: net 50 days. (5 Marks) b. LEI has the following capital structure, which it considers to be optimal: 25 % Debt 15 % 60 % Preferred stock Common equity 100 LEI's expected net income this year is $34, 285.72, its established dividend payout ratio is 30%, its tax rate is 40 % and investors expect earnings and dividends to grow at a constant rate of 996 in the future. LEl paid a dividend of $3.60 per share last year, and its stock currently sells at a price of $54 per share. LEI can obtain new capital in the following ways: Preferred: New preferred stock with a dividend of $11 can be sold to the public at a price of $ per share. Debt: Debt can be sold at an interest rate of 12 %. Determine the cost of each capital structure component. (2+2+2-6Marks) i Calculate the Weighted average cost of capital (WACC). (4 Marks) ii. LEI has the following investment opportunities that are typical average-risk projects for the firm i. COST AT t-0 $10,000 PROJECT RATE OF RETURN A 17.4% B 20,000 16.0 10,000 20,000 10,000 Which projects should LEI accept? Why? (5 Marks) 14.2 14.2 E 12.0 Question 4 (20 Marks) [CLO 4] A company is considering two projects and can only accept one of them. The projected cas flows are as follows: a. Project B Cash Flow -$15,000,000 $21,700,000 Year Project A Cash Flow -$10,000,000 $15,000,000 3 The company's WACC is 10 %. Compute the payback, NPV, and IRR for each project. Which pra should be chosen? Explain the logic behind your choice. (3+3+3+3= 12 Marks) b. The net investment (NINV) in a project is defined as the project's initial net cash outlay, tha the outlay at time (period) 0. What are the four steps in calculating NINV? (4 Marks