Gemini Corp is a publicly traded corporation, with both its bonds and common equity shares traded in the open market.

Gemini estimates its WACC, based on the following financial market situations:

Applicable federal plus state tax rate: 40%         

Bond market data:

The bonds issued by Gemini on average are currently traded at 94.96 percent of par (settlement date: Apr-12-2017), with coupon rate of 2.950%, semi-annual coupon frequency, and maturity date is Dec-15-2025;

The market value of Gemini’s “total (long-term) debt” is currently $19.67 Billion.

Stock market data:

        The most current stock price for Gemini is $50.78 per share;

        The most current dividend rate for Gemini is $1.00 per share;

        The most current annual net income for Gemini amounts to $7.5 million;

        The most current annual depreciation for Gemini amounts to $2.5 million;

        The number of common equity shares outstanding for Gemini is 5 million shares;

        The long-term dividend growth rate (5-Year annual avg.) for Gemini is 3.52%;

        The historical market risk “Beta” for Gemini is 0.25;

        The return for US S&P-500 stock market index is 11.42% per year between Years 1928 and 2016;

        The “risk-free” return for US Treasury-bonds is 5.18% per year between Years 1928 and 2016;

        The “market cap” (i.e., market value of common equity capitalization) for Gemini is currently $24.77 Billion;

        Gemini has never issued any preferred stocks so far.

QUESTIONS:

What is the estimated amount of “cost of debt before tax” for Gemini Corp?

What is the estimated amount of “cost of common equity” for Gemini Corp?

What is the estimated amount of WACC for Gemini Corp?

For capital budgeting purpose, should this WACC calculated as above be used to discount those cash flows in real purchasing power terms (deflated), or instead to discount those cash flows in nominal terms (inflated)?

Gemini is evaluating an investment project with no extra risk being involved, the initial CF0 = -$10,000,000, for the following 8 years CF1 through CF8 = +$1,350,000 per year, and all these given CFs are in real purchasing power terms (deflated).What will be the appropriate NPV $ amount of this project to Gemini?