Determine the firms weighted average cost of capital

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The Simpson corp. is planning construction of a new plant. the initial cost of the investment is $5 million. effecieinxes from the new plant are expected to reduce cost by $620,000 forever (perpetual). the corporation has a total value of $400 million and has outstanding debt of !150 million. the firm has an after tax cost of debt of 5% and a cost of equity of 8%

a. determine the firms weighted average cost of capital

b. determine the npv of the project by discounting at the WACC

Reference no: EM13793552

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