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Wk 4 - Apply: Capital Structure and Project Assessmen. Saved Help 1 Peter Johnson, the CFO of Homer Industries, Inc is trying to determine the

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Wk 4 - Apply: Capital Structure and Project Assessmen. Saved Help 1 Peter Johnson, the CFO of Homer Industries, Inc is trying to determine the weighted Cost of Capital (WACC) based on two different capital structures under consideration to fund a new project. Assume the company's tax rate is 30% Component Scenario 1 Scenario 2 Cost of Capital Tax Rate Debt $5,000,000.00 $2,000,000.00 8% 30% Preferred Stock 1,200,000.00 2,200,000.00 10% Common Stock 1,800,000.00 3,800,000.00 13% Total $8,000,000.00 $8,000,000.00 100 points Skipped 1-a. Complete the table below to determine the WACC for each of the two capital structure scenarios. (Enter your answer as a whole percentage rounded to 2 decimal places (e.g..3555 should be entered as 35.55).) Scenario 1 Weight Scenario 2 Weight % Scenario 1 Scenario 2 Weighted Cost Weighted Cost Tax Rate 30% Debi Preferred Stock Common Stock Total Cost of Capital 8% 10% 13% 0.00% 0.00% 1-5. Which capital structure shall Mr. Johnson choose to fund the new project? O Scenario 1 O Scenario 2 MC Gran Hill Prey 1 of 1 !!! Next > high mogle Saved Wk 4 - Apply: Capital Structure and Project Assessmen.. Assume the new project's operating cash flows for the upcoming 5 years are as follows: Help S 1 Project A $ -8,000,000.00 1,020,000.00 1,850,000.00 1.960,000.00 2.370,000.00 2,550,000.00 Initial Outlay Inflow year 1 Inflow year 2 Inflow year 3 Inflow year 4 Inflow year 5 WACC 100 points Skipped 2-a. What are the WACC (restated from Part 1), NPV, IRR, and payback years of this project? (Negative values should be entered with a minus sign. All answers should be entered rounded to 2 decimal places. Your answers for WACC and IRR should be whole percentages (e.g..3555 should be entered as 35.55).) WACC (from Part 1) NPV IRR Payback Method 2-6. Shall the company accept or reject this project based on the outcome using the net present value (NPV) method? O Project A should be accepted O Proiect A should be reiected Vic

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