A company considers an expansion project. The following is the information of the expansion project in detail.

Compute its amount of initial investment outlay

Compute its supplemental operating cash flow

Compute its terminal cash flow

Compute its NPV with 10% require rate of return

A firm raises capital with issuing debt and prefer stocks. It will sell a 15-year bond with 12% coupon rate that will semiannually be paid for $1,200. The firm is about to sell prefer stock that has $100 par value and pays 2.5 % of par value as dividend every quarter. Its current price is set to $12.5 and floatation cost of this issuance is 5%. (tax rate is 40%)

Compute cost of debt

Compute cost of prefer stock