6. Given the following information for Magrath Power Co., find the WACC. Assume the company's tax rate is 35%. 5 marks) Debt: 10,000 6.4% coupon bonds outstanding, $1,000 par value, 25 years to maturity, and selling for 108% of par; the bonds make semi-annual payments. Common stock: 495,000 shares outstanding and selling for $63 per share the beta is 1.15. Preferred stock: 35,000 outstanding shares of $3.50 preferred stock currently selling for $72 per share. Market: 7% market risk premium and 3.2% risk-free rate. 5. Darlene Corporation must choose between two mutually exclusive projects. The required rate of return for both projects is 10%. (20 marks) Year 0 1 2 3 Cash Flow (A) $ 50,000 $ 9,000 $ 16,000 $ 40,000 Cash Flow (B) $ 100,000 $ 60,000 $ 30,000 $ 30,000 a. If you apply the payback criterion, which investment will you choose? Why? (5 marks) b. If you apply the NPV criterion, which investment will you choose? Why? (5 marks) c. If you apply the profitability index criterion, which investment will you choose? Why? (5 marks) d. Based on your answers in (a) through (c), which project will you finally choose? Why