Problem 8) (Challenge Problem Ex-1) Nevada inc. is considering a new project that will require an initial investment of $10 million. It will fund the project with $3 million debt(bond). $1 million preferred stock, and $6 million common equity. Firm has noncallable bonds outstanding that mature in ten years with face value of $1000, an annual coupon rate of 8%, and a market price of $1,200. The firm can sell shares of preferred stock that pay an annual dividend of $10 at a price of $100 per share. Firm will issue new common stock to help fund the project. Its common stock is currently selling for $30 per share, it is expected to pay a dividend of $3 at the end of next year. The company's constant growth rate is 9%, and tax rate is 40%. 1) Calculate the weights of debt, common equity and preferred stocks for project's WACC calculation. 2) Calculate before tax and after-tax costs of debt. 2 financial cale. F V 2 1 0 09 I/ 1 = 5. 3639 ?/ 2 3) Calculate the cost of preferred stock. CR = 810, PMT = 80 Pyz - 1,200 4) Calculate the cost of common equity. this is let N 2 10 5) Calculate the WACC of the project