Use the following information about a firm to estimate the firms weighted average cost of capital.

• The firms market value of debt is $95,000,000.
• The firm has 375,000 shares of preferred stock outstanding trading at $69.14 per share. The preferred stock cash dividend is $5.85 per share.
• The firm has 3,649,000 shares of common stock outstanding, trading at $46.29 per share.
• The common stocks beta is 1.59.
• The yield on the firms debt is 6%.
• The risk-free rate is 1.5% and the expected market return is 6.5%.
• The firms marginal tax rate is 20%.

The firm, which is diversified across industries, is considering undertaking a new project within a specific sector. Is it a good idea to use the companys cost of capital to estimate the projects NPV? If not, how could you (using concepts we discussed in class) compute the projects cost of capital?

Please clearly show your work for your answers in Excel.