Your company estimates its WACC. You know the following information: a. The company’s capital structure consists of 60% common equity and 40% debt b. Tax rate is 40% c. Your company has 20-year bonds outstanding with a 9%annual coupon and currently that bond is trading at par d. 5.5% is the risk-free rate e. 5% is the market risk premium f. 1.4 – is the company stock’s beta Calculate the company’s WACC. ————————————————————————————————————————————————————————————————————The WACC is 7.5%. Project: Investment / NPV / IRR A: 3000 / -0.99 / 14% B: 2500 / 500 / 5% C: 2750 / 145 / 11% D: 4250 / 1 / 7.4% a. Based on NPV which project or projects would you select? Projects are mutually exclusive. b. Based on NPV which project or projects would you select? Projects are independent. c. Based on IRR which project or projects would you select? Projects are mutually exclusive. d. Based on IRR which project or projects would you select? Projects are independent. e. Based on NPV and IRR which project or projects would you select? Projects are mutually exclusive. f. Based on NPV and IRR which project or projects would you select? Projects are independent
Based on NPV which project or projects would you select?
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