Question 3 PPB Group has to decide between two mutually exclusive investment projects. Each project cost $7,750,000 and has an expected life of 3 years Annual net cash flows from each project begin one (1) year after the initial investment is made and have the following probability distributions: Project A Project B Probability Net Cash Flows $(000) Probability Net Cash Flows $(000) 0.2 7,000 0.2 0 0.6 7,750 0.6 7,750 0.2 8,500 0.2 19,000 PL has decided to evaluate the more risky project at a 12% rate and the less risky project at a 10% rate. Required: (i) What is the expected value of the annual net cash flows from each project? variation? What is the coefficient (Marks 10) of (ii) What is the risk-adjusted NPV of each project? Which project the company Question 4 should accept? (Marks 05) [MARKS 15] A company has 10 million shares each with a market price of $4.20 each, whose cost is 7.5%. it has $30 million of 5% bonds with a market value trading at 101% and an after-tax cost of 3.5%. it has a bank loan of $5 million whose after-tax cost is 3.2%. It also has 2 million 8% preference shares of $1 whose market price is $1.33 per share and whose cost is 6%. Required: Calculate the WACC. (Marks 05)