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MB Inc. has 80,000 bonds outstanding that are selling at par. Bonds with similar characteristics are yielding 7.5 percent. The company also has 750,000 shares of 7 percent preferred stock and 2.5 million shares of common stock outstanding. The preferred stock sells for $65 a share. The common stock has a beta of 1.34 and sells for $42 a share. The U.S. Treasury bill is yielding 2.8 percent and the return on the market is 11.2 percent. The corporate tax rate is 30 percent. What is the firm's weighted average cost of capital? Select the choice that is closest to your answer. 10.15 percent 10.23 percent 10.32 percent 10.36 percent Question 33 1pts Glitter Inc. uses one-quarter common stock and three-quarters debt to finance their operations. The after-tax cost of debt is 7 percent and the cost of equity is 13 percent. The management of Glitter Inc. is considering an expansion project that costs $1.2 million. The project will produce a cash inflow of $60,000 in the first year and 120,000 in each of the following 10 years (i.e. 120,000 in years 2 thru 11). What is the WACC and should Glitter Inc invest in this project? 8.5 percent, no because the NPV is $419,021 8.5 percent, yes because the NPV is $419.021 7.75 percent, no because the NPV is $397,801 7.75 percent, yes because the NPV is $397,801 7.75 percent, no because the NPV is 838,671

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