So the WACC after all the calculations is 9.09%, so does that mean they should invest in the new warehouse?

Common Stock = $8,000,000

To finance the investment, Vestor has issued 20 year bonds with a $1,000 par value, 6% coupon rate and at a market price of $950. Preferred stock paying a $2.50 annual dividend was sold for $25 per share. Common stock of Vestor is currently selling for $50 per share and has a Beta of 1.2. The firm’s tax rate is 34%. The expected market return of the S&P 500 is 13% and the 10-Year Treasury note is currently yielding 3.5%. 

Determine what discount rate (WACC) Vestor should use to evaluate the warehousing facility project. 

Assess whether Vestor should make the warehouse investment.

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