Students were asked to evaluate two mutually exclusive, equa…

Students were asked to evaluate two mutually exclusive, equally risky, and not repeatable projects, A and B. The cash flows for each project are shown on the timeline below. The financial analysis concluded that project B should be chosen over project A.  What must be true about the company’s WACC to justify making this decision? (Be brief but specific.)  

Consider a company with the following capital structure.  Th…

Consider a company with the following capital structure.  The bank note is not a recurring loan and will be paid off within the next 6 months.  Assume the firm is at its optimal capital structure and all financing costs (r) reflect the cost of raising new capital.  The tax rate is 30%. Calculate the weighted average cost of capital.