You have the following information about Burgundy Basins, a sink manufacturer.

Equity shares outstanding		20	million
Stock price per share	$	42
Yield to maturity on debt		6.5	%
Book value of interest-bearing debt	$	365	million
Coupon interest rate on debt		4.7	%
Market value of debt	$	260	million
Book value of equity	$	440	million
Cost of equity capital		12.4	%
Tax rate		35	%

Burgundy is contemplating what for the company is an average-risk investment costing $44 million and promising an annual ATCF of $5.2 million in perpetuity.

a. What is the internal rate of return on the investment? (Round your answer to 2 decimal places.)

b. What is Burgundy's weighted-average cost of capital? (Round your answer to 2 decimal places.)

Answer rating: 100% (QA)

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