Use the 10-year Treasury Bond rate as the risk-free rate and assume that the market risk premium is 8.5% to find Johnson & Johnson’s cost of equity. Assume that Johnson & Johnson’s bonds are rated AAA and that Johnson & Johnson’s corporate tax rate is 25%. Find Johnson & Johnson’s weighted average cost of capital. Assume that the project will be financed with internal funds. You will need to find additional financial information from the Wall Street Journal and online at sites like Yahoo Finance to complete your calculation. Use Johnson & Johnson’s debt-to-equity ratio to compute the percentages of debt and equity.

 Determine if the new heart stent J&J is developing is desirable by computing the NPV, IRR, payback period and profitability index. Recalculate your results assuming they sell 800,000 units.