koba

hi,
1-
a) the outflow is 10000 so it will be -10000 at the start
b) this is important to understand.......
target D\E is 0.4 which means means that in target Capital structure
Debt will be 0.4 if equity is 1
so total it, the total capital will be 1.4
debt's portion will be 0.4/1.4
and equity's portion will be 1/1.4
now calculate Kd= 6% (1-.34)= 3.96
Ke= 12
WACC= 3.96* (0.4/1.4) + (12 (1/1.4)=9.702 app
discounting project with it we get
1459.46
so A is my answer