Question: Please help with A and B. Confused. 3. a) The capital structure of a company consists of debt and common equity. The firm has 500,000

 Please help with A and B. Confused. 3. a) The capital

Please help with A and B. Confused.

3. a) The capital structure of a company consists of debt and common equity. The firm has 500,000 bonds outstanding that are selling at par value. The par value of each bond is \\( \\$ 1,000 \\). Bonds with similar characteristics are yielding a before-tax return of 8 percent. The company also has 30,000,000 shares of common stock outstanding. The stock has a beta of 1.50 and sells for \\( \\$ 50 \\) a share. The return on U.S. Treasury bills is 5 percent and the market rate of return is 11 percent. The company's tax rate is 25 percent. What is the firm's weighted average cost of capital? b) The company is considering a five-year project that is expected to generate the following net (or total) after-tax cash flows. *The operating cash flow is defined as after-tax net income + depreciation The initial investment (or initial cost) of the project is \\( \\$ 15,000,000 \\). The assets used in the project will have a before-tax market value (salvage or resale value) of \\( \\$ 2,000,000 \\) at the end of project in year 5 . Assume that the assets are fully depreciated over the fiveyear life of the project and the book value at the end of year 5 is zero. The project also requires an initial investment in net working capital of \\( \\$ 1,000,000 \\), which is fully recoverable when the project ends in year 5 . The project has the same risk as the firm overall. Find the net present value (NPV) of the project

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