WWE is a large conglomerate and is thinking of entering the widget business. You need to find different discount rates to find the NPV of the project. Here are is the information you need: WWE debt-equity ratio = 1:2

WWEs interest rate on borrowings = 8%

Competitors debt-equity ratio = 3:5

Competitors interest rate on borrowing = 11%

Competitors equity beta = 1.8

Corporate tax rate for both firms = 40%

Market risk premium = 6% Risk-free rate = 5% What is WWEs cost of levered equity?

A. 15.47% B. 15.63% C. 15.87% D. 16.49% E. 16.88%

What is WWEs weighted average cost of capital (WACC)?

A. 11.48% B. 11.73% C. 12.00% D. 12.12% E. 12.59%

(Show details of your work for both questions)