Consider the same project described in the previous problem, where the equipment will cost $18,000,000. It will depreciated by the straight-line method over six years, and the useful life of the project is also estimated to be six years. You expect annual sales to be $12,750,000. Fixed Costs are estimated at $1,750,000 and variable costs should be 55% of sales. Your firm faces a 30% marginal tax rate. You also expect that at the end of the six-year operating life, you will be able to sell the equipment for scrap for $5,000,000. Consider any capital gains taxes on this sell. After the initial analysis, the members of the team realized that the firm will also need to carry $3,200,000 in net working capital through the life of the project to support the operation. Given this additional consideration, re-estimate the Net Present Value of the investment given the firms requirement of a return of 9% on such projects. Group of answer choices -$592,993 -$646,362 $1,937,527 $645,583 Flag question: Question 7 Question 710 pts You have been assigned to calculate the Weighted-Average-Cost-of-Capital for your firm, which has two sources of long-term capital. The companys marginal tax rate is 25%. First, there are 207,500 shares of common stock, which are currently selling for $41.93. Recently, the firm announced EPS of $3.87. You feel that it is reasonable to assume that earnings will grow at 1.35% into the future. Second, there is an issue of 4,500 coupon bonds with a face value of $1,000, which pays 5.10% (annual) coupons, and mature in eleven years. These bonds are currently trading for $948.07. First, given the assumptions, estimate the implied return on the common shares.

Group of answer choices

10.70%

9.36%

10.58%

11.41%