Pixar productions are evaluating a new project. Their analysts have determined that the IRR of the project is 15%. Shoul

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Pixar productions are evaluating a new project. Their analysts
have determined that the IRR of the project is 15%. Should Pixar
pursue the project? Pixar shares currently trade for $132 per share
and they have 4M shares outstanding. They have 3 bond issues
outstanding one will mature in 5years and has a yield to maturity
of 4.6% the other two will mature in about 15 years and have a
yield to maturity of 9%. Currently, the 5-year bond trades for a
total value of $30M and the other bonds trade for a total value of
$60M. On their financial statements, the total value of equity is
$140M and the value of their debt is $100M. Pixar has a beta of
0.78, the expected market return is 12% and the risk-free rate is
1%. Assume that Pixar’s tax rate is 28%
find the WACC, Pretax cost of debt, After-tax cost of
debt