Question: I have problem solving question 3. please show work, thanks!! You will use the following information for the rest of the assignment (for anything that
I have problem solving question 3. please show work, thanks!!
You will use the following information for the rest of the assignment (for anything that is not updated in later questions). You are trying to determine what would happen to your firm's WACC if you take on a new project. Your capital structure consists of 30% debt with a cost of 6% and a beta of 0.2, and an equity cost of 18.76%. The market return is 14% and the risk-free rate is 4% Your firm has invested in three projects, with 30% in project 1 (beta of 1.3), 30% in project 2 (beta of 0.75), and 40% in project 3 (beta of 1.5). The tax rate is 40%. First, what is your current WACC? Input your answer in decimal (not percentage) scale, rounded to three decimal places (12.11% should be entered as 0.121). 0.142 If the new project had a beta of 1.215 and would increase the size of the form by 50%, WACC would not change. O True False
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