First, calculate the weights for debt and equity
wd + we = 1
wd = 0.50We
0.5We + We = 1
wd = 0.333, we = 0.667
Second, calculate WACC
WACC = (wd × kd) × (1 − t) + (we × ke) = (0.333 × 0.09 × 0.67) + (0.667 × 0.15) = 0.020 + 0.100 = 0.120
Third, calculate the PV of the project cash flows
N = 8, PMT = -1,000, FV = 0, I/Y = 12, CPT PV = 4,967
And finally, calculate the project NPV by subtracting out the initial cash flow
NPV = $4,967 − $5,000 = -$33
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