Question

Question 22 (1 point) A firm has an effective (after-tax) cost of debt of 4%, and its weight of debt is 40%. Its equity cost of capital is 12%, and its weight of equity is 60%. Calculate the firm's weighted average cost of capital (WACC). [Enter your answer as a decimal rounded to four decimal places.] Your Answer: Answer D View hint for Question 22 Question 23 (1 point) A firm is considering an investment project that costs $250.000 today and $250,000 in one year, but would produce benefts of $50,000 a year, starting in one year, forever. What is the NPV of this investment project if the firm applies an annual discount rate of 8% to all future cash flows? Your Answer Answer D View hint for Question 23
i need help with these two questions

Answer 1

22)

WACC = weight of debt * Cost fo debt + weight of equity * Cost of equity

= 0.4 * 4% + 0.6 * 12%

= 8.8%

23)

NPV = - PV of costs + PV of perpetuity

= -250000 - 250000/1.08 + 50000/0.08

= 143518.52

PV of perpetuity = Annual Cash flow/interest rate

Present value = Future value/(1+i)^n

i = interest rate per period

n= number of periods