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Part 1  Peter Johnson, the CFO of Homer Industries, Inc is trying to determine the Weighted Cost of Capital (WACC) based on two different capital structures under consideration to fund a new project

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Part 1 
Peter Johnson, the CFO of Homer Industries, Inc is trying to determine the Weighted Cost of Capital (WACC) based on two different capital structures under consideration to fund a new project. Assume the company's tax rate is 30%. 
Component Scenario 1 Scenario 2 Cost of Capital Tax Rate Debt I $4,000,000.001 $1,000,000.001 8% I 30% 1 Preferred Stock 1 1,200,000.001 1,500,000.001 10% I 1 Common Stock 1 1,000,000.001 3,700,000.001 13% 1 I Total I $6,200,000.001 $6,200,000.001 I 
1-a. Complete the table below to determine the WACC for each of the two capital structure scenarios. (Enter your answer as a whole percentage rounded to 2 decimal places (e.g..3555 should be entered as 35.55).) 
Scenario 1 Weight % Scenario 2 Weight % Scenario 1 Weighted Cost Scenario 2 Weighted Cost Cost of Capital Tax Rate Debt 0. . 8% 30% Preferred Stock ' .. . 10% Common Stock ' .. . 13% Total 0.' 
1-b. Which capital structure shall Mr. Johnson choose to fund the new project? 
0 Scenario 1 0 Scenario 2 
Part 2 
Assume the new project's operating cash flows fo the upcoming 5 years are as follows: 
Project A Initial Outlay $ -6,200,000.00 Inflow year 1 1,270,000.00 Inflow year 2 1,750,000.00 Inflow year 3 1,980,000.00 Inflow year 4 2,160,000.00 Inflow year 5 2,450,000.00 WACC 1 
2-a. What are the WACC (restated from Part 1), NPV, IRR, and payback years of this project? (Negative values should be entered with a minus sign. All answers should be entered rounded to 2 decimal places. Your answers for WACC and IRR should be whole percentages (e.g..3555 should be entered as 35.55).) 
WACC (from Part 1) 
NPV 
IRR 
Payback Method 
2-b. Shall the company accept or reject this project based on the outcome using the net present value (NPV) method? 
0 Project A should be accepted 0 Project A should be rejected