Assume: YTM = 7%, Beta = 1.02, Dividend on Preferred stock = $2,price of preferred stock = 22$, Market risk premium = 7%, Tax rate = 23%, floatation cost = 4%, risk free rate = 3%. The firm wants to raise $400 Million in debt, $ 100 million in preferred stock, $800 million in new stock issue with a total capital to be raised of $1.5 billion. Calculate the WACC of the project, and assign the level of internal rate of return at which the project should be accepted.
