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2. please answer questions completely. Divided Furniture...

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Finance

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please answer questions completely.

Divided Furniture Inc. has 11.000 bonds outstanding with a market price of $104 per bond. The firm also has 35,000 preferred shares outstanding and 45,000 common shares outstanding. Preferred stock and common stock are both expected to pay a year-end dividend of $2.20 per share. The current price per share of common stock is $36 per share. Preferred stock is priced at $52 per share Preferred dividends do not grow and common stock dividends are expected to grow at a rate of 4 percent. The firm's tax rate is 40 percent. If the yield on the firm's bonds is 8%, what is the firm's weighted average cost of capital? For the toolbar, press ALT+F10 (PC) or ALT+FN+F 10 (Mac). You are considering an investment in a project that requires an initial outlay of $350,000 and will produce after-tax cash flows of $50,000 per year for the next 10 years. Your firm uses 40 percent debt and 60 percent equity in its financing The after-tax costs of debt and equity are 6% and 11%, respectively What is the firm's WACC? (3 points) What is the project NPV? Should the project be accepted? (3 points) a b

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