Please can you answer this question with all workings

3. The Cost of Capital [25 Marks] 1) Och Inc. has a target debt-equity ratio of 0.55. The company has a beta of 1.2. The risk-free rate is 1.6%, and the market risk premium is 9%. The after-tax cost of debt is 4.9%. Och is considering a project that requires an initial investment in plant and equipment of $45 million. The project will result in initial after-tax cash savings of $3.5 million at the end of the first year, and these savings will grow at a rate of 3% per year indefinitely. The tax rate is 35%. a) Calculate the firm's after-tax weighted average cost of capital (WACC). [5 Marks] b) Assume the cost-saving project has the same risk as the firm's existing assets. Calculate the project's NPV and explain whether the project should be taken. [5 Marks] c) Assume the cost-saving proposal is somewhat riskier than the usual projects the firm undertakes; management uses the subjective approach and applies an adjustment factor of +2% to the cost of capital for such risky projects. Calculate the project's NPV and explain whether the project should be taken. [5 Marks] ECO-20051 Finance 2 417 2) Why do we use an after-tax figure for the cost of debt but not for the cost of equity? Briefly explain your answer. [4 Marks] 3) "Since the cost of debt is less than the cost of equity, the WACC will be reduced by substituting debt for equity." Is the statement true or false? Explain your answer. [6 Marks]