Shadowland, a manufacturer of air-freightable pet crates, has identified two projects that, though having a relatively high

Question:

Shadowland, a manufacturer of air-freightable pet crates, has identified two projects that, though having a relatively high risk, are expected to move the company into new revenue markets. Utilize a spreadsheet solution to

(a) Select any combination of the projects if the MARR is equal to the after-tax WACC

(b) Determine if the same projects should be selected if the risk factors are enough to require an additional

Shadowland, a manufacturer of air-freightable pet crates, has id

Financing will be developed using a D-E mix of 60-40 with equity funds costing 7.5% per year. Debt financing will be developed from $10,000, 5% per year, paid quarterly, 10-year bonds. The effective tax rate is 30% peryear.

MARR
Minimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other...