[20 Marks] SECTION B: STRUCTURED QUESTION This section contains ONE (1) question that carries 20 marks. Question AV Beauty Bhd. is considering two mutually exclusive projects, Project K and Project S. The projected cash flows for both projects are shown in the table below. The projects are as risky as the usual projects the company undertakes. The company has a target debt-to-equity ratio of 0.75, a cost of equity of 21%, and an after-tax cost of debt of 4.7%. Year Project K Projects 0 -RM40,000 -RM380,000 1 20,000 130,000 2 19,000 120,000 3 18,000 118,000 4 17,000 115,000 5 16,000 110,000 Required: a) Calculate the weighted average cost of capital (WACC) of AV Beauty Bhd. (6 marks) b) Explain why the company can use its WACC as the projects' required rate of return. (1 marks) c) Calculate the net present value (NPV) of both projects. (12 marks) d) Which project(s) would you choose? (1 marks)