Please show your work using EXCEL FORMULA AND FUNCTIONS. You are given all of the information provided in the attached case.

Show all of your work, calculations, and explain your answers! Show your work using EXCEL FORMULA AND FUNCTIONS.

1. Cost of Capital, Capital Structure:

Capital Structure theory addresses finding a firm's optimal capital structure. How do you determine the optimal capital structure?

What is the firm's current Weighted Average Cost of Capital (WACC) at its current capital structure?

Complete the Cost of Capital & Capital Structure worksheet.

What is the company's optimal capital structure?

2. Hurdle Rate:

What is a Hurdle rate? What is a Risk-adjusted Hurdle Rate?

Based on KEMPER's current capital structure, what is the appropriate Hurdle Rate for the project?

3. Capital Budgeting:

Please complete the capital budgeting analysis for this project. You should develop the incremental cash flows:

• Initial investment cash flow at t=0,
• Operating cash flows through the life of the project,
• Terminal cash flows

You should evaluate the project using:

• Net Present Value, o Internal Rate of Return,
• Modified Internal Rate of Return

Present your decision whether the project should be accepted or rejected, and justify.