Compute the wacc of nhh ltd

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Problem 1: NHH Ltd. has a capital structure of 45% common stock, 20% preferred stock, and 35% debt. The financing costs for common stock, preferred stock and debt are 13%, 9% and 10%, respectively. Assume the relevant tax rate is 15%. Compute the WACC of NHH Ltd.

Problem 2: If NHH Ltd. is considering investing in a project which is more risky than the average of the firm's existing projects, should the firm use the WACC as the discount rate for the project's cash flows? Briefly explain your answer.

Reference no: EM132880915

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