Q1) Fiera Corporation is estimating new project which cost $45,000. Project will be financed by using 40% debt and 60% equity, therefore maintaining firm's present debt-to-equity ratio. The firm's stockholders have required rate of return of 18.36%, and its bondholders expect a 10.68% rate of return. Project is expected to make annual cash flows a $13,000 before taxes for next 2 decades. Fiera Corporation is in 36% tax bracket.

i) Find out firm's weighted average cost of capital (WACC).

ii) Compute traditional net present value (NPV) of project using the WACC. Must the project be undertaken?

iii) By using Modigliani and Miller's proposition H. Find out the required return on unlevered equity.

4) By using adjusted present value (APV) method to find out whether or not the project must be undertaken.

5) Use flow-to-equity (FTE) method to whether or not project must be undertaken.