Valuing a project using WACC Year Abracadabra Corp. is considering a project to expand its current business in potion making. The forecasted free cash flow is given on the right. Other potentially useful information is given below. (1) How would you suggest the company in this capital budgeting decision? (state clearly) FCF -1,000 1,323 1,569 3,288 1,029 1,425 622 3,800 3,800 3,800 2,700 (2) What is the key assumption underlying your suggestion above? (answer below) Book value of equity Market value of equity Total liability Market value of debt Market value of debt in the previous year Interest expense Corporate tax rate 8,000 10,000 20.000 15,000 15,000 900 40% Abracadabra's stock beta Expected return on S&P500 Risk-free rate 1.4 10% 4%