Part $1$ Part $2$

Assume the new project's operating cash flows for the upcoming $5$ years are as follows:

$2-$a$.$ What are the WACC $($restated from Part $1),$ NPV$,$ IRR, and payback years of this project? $($Negative values should be entered with

a minus sign. All answers should be entered rounded to $2$ decimal places. Your answers for WACC and IRR should be whole

percentages $($e$.$g$..3555$ should be entered as $35\mathrm{.}55).)$

$2-$b$.$ Shall the company accept or reject this project based on the outcome using the net present value $($NPV$)$ method?

Project A should be accepted

Project A should be rejected

Peter Johnson, the CFO of Homer Industries, Inc is trying to determine the Weighted Cost of Capital $($WACC$)$ based on two different

capital structures under consideration to fund a new project. Assume the company's tax rate is $30\%.$

$1-$a$.$ Complete the table below to determine the WACC for each of the two capital structure scenarios. $($Enter your answer as a whole

percentage rounded to $2$ decimal places $($e$.$g$..3555$ should be entered as $35\mathrm{.}55).)$

$1-$b$.$ Which capital structure shall Mr$.$ Johnson choose to fund the new project?

Scenario $1$

Scenario $2$