Q1) Please calculate the Cost of Debt (not taking taxes into consideration).
Cost of Debt = *Calculate the YTM for the bond which is sold at a discount rate: that will be
your cost of debt.
Q2) Please calculate Cost of Equity (using the CAPM method)
Q3) Please calculate WACC
Q4) Please calculate NPV (remember to include the salvage value as part of the 5th year's cash
flow)
Q5) Please calculate IRR
Q6) Is this a good investment for Sunny Inc.? Why or why not?
Fig: 1