Use this scenario to answer the following 4 questions. Small Things Inc. (STI) currently has a bond issue outstanding with 8 years to maturity, a face value of $1,000, and a coupon rate of 5.00% annually. The bond currently sells for 87.50 percent of par. STI's common stock has a beta of 1.10, and currently sells at $72 per share. Treasury bills yield 3% and the expected rate of return on the market is 10%. STI's total bond debt has a face value of $16,000,000 and there are 500,000 shares outstanding. The marginal tax rate is 25%.

1. What is STI's pre-tax cost of debt? Enter your answer as a percentage rounded to 2 decimal places. (An answer of 5.12% would be entered as 5.12).

2. What is STI's cost of equity? Enter your answer as a percentage rounded to 2 decimal places. (An answer of 5.12% would be entered as 5.12).

3. What is STI's WACC? Enter your answer as a percentage rounded to 2 decimal places. (An answer of 5.12% would be entered as 5.12).

4. STI has a project that costs $3,000,000 today and will return a one-time cash flow of $3,500,000 at the end of year 1. What is the NPV of the project? Round your answer to the nearest dollar (no decimals). (An answer of $100.12 would be entered as 100).