Question

You are given the following information: CFBT = $195,000; T = 40%; this project will last for six years. The project has a 1.5-percent extra risk premium compared with the firm’s cost of capital. The firm has 30 percent debt at a cost of 6 percent, 50 percent common equity at a cost of 12 percent, and the remainder is preferred shares at 8 percent.
a. What is the WACC?
b. What is this firm’s cost of capital?
c. Calculate the present value of operating cash flows.



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  • CreatedFebruary 25, 2015
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