[Greenmile1234]

Fiera Corporation is evaluating a new project that cost $45,000. The project will be financed using 40% debt and 60% equity, thus maintaining the firm's current debt-to-equity ratio. The firm's stockholders have a required rate of return of 18.36%, and it bold holders expect a 10.68% rate of return. The project is expected to generate annual cash flows of $13,000 before taxes for the next two decades. Fiera Corporation is in the 36% tax bracket.
1. Determine the firm's weighted average cost of capital (WACC).

2. Calculate the traditional net present value (NPV) of the project using the WACC. Should the project be undertaken?

3. Using Modigliani and Miller's proposition H. determine the required return on unlevered equity.

4. Use the adjusted present value (APV) method to determine whether the project should be undertaken

5. Use the flow-to-equity (FTE) method to calculate whether the project should be undertaken.

[Curlyben]

Please refer to this announcement

Read this first: Expectations for the Homework Help board
Do not simply retype or paste a question from your book or study material

We won't do your homework questions for you.
You were given the assignment for you to learn.

If you come up with your own answer and post it for us to critique that is within reason.

If you have some SPECIFIC questions that you couldn't find or didn't understand, we may help with that.
But this is your assignment, so show us you have at least attempted to complete it on your own.

Thank you.

[Greenmile1234]

Curleyben,

Thank you for the response. If you can assist me in breaking down the formula I think I would be able to figure it out.