Question 32 5 pts Dean LL hired you as a consultant to help decide on an expansion project. The firm's cost structure co

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Question 32 5 Pts Dean Ll Hired You As A Consultant To Help Decide On An Expansion Project The Firm S Cost Structure Co 1 (108.07 KiB) Viewed 29 times

Question 32 5 pts Dean LL hired you as a consultant to help decide on an expansion project. The firm's cost structure consists of 55% debt and 45% equity. The cost of equity is 10%. The firm's debt consist of bonds that have an 8% coupon (paid semi-annually) and have 20 years to maturity. The bonds are currently selling at $950 and have a face value of $1000. The firm's tax rate is 30%. 1. What is the company's WACC? Show all your work 2. The company is expanding and the IRR of the expansion project is 8 percent. Should the project be accepted or rejected? why? Explain. 3. Suppose the firm's tax rate decreases to 25%. Do you expect this to affect the expansion decision? Why or why not? Show all your work. Explain all your answers using the appropriate equations. Your explanation determines your grade Edit View Insert Format Tools Table 12pt Paragraph B 1 U A 2 T