Westlake Corp has a capital structure that has 60 percent
Westlake Corp. has a capital structure that has 60 percent debt at a cost of 12 percent and 40 percent equity. Westlake’s stock has a beta of 1.2, market risk premium of 8 percent, and a risk-free rate of 5 percent. The firm has a potential project on hand, which requires an initial investment of $120,000 and generates an annual year-end cash flow of $37,500 for five years.
Calculate the IRR of this project. Decide if the project should be accepted or not, assuming the project is less risky for the firm. Tc = 40%.

Membership TRY NOW
  • Access to 800,000+ Textbook Solutions
  • Ask any question from 24/7 available
    Tutors
  • Live Video Consultation with Tutors
  • 50,000+ Answers by Tutors
OR
Relevant Tutors available to help