You are considering an investment in a project that requires an initial outlay of $350,000 and will produce after-tax cash flows of $50,000 per year for the next 10 years. Your firm uses 40 percent debt and 60 percent equity in its financing. The after-tax costs of debt and equity are 6% and 11%, respectively.

a.	What is the firm’s WACC?
b.	What is the project NPV? Should the project be accepted?

Answer rating: 100% (QA)

To calculate the firms weighted average cost of capital WACC we need to determine the cost of debt c... View the full answer