039\Downloads\FIN 489 EXTRA.pdf - + 1 Please consider the following information for the next 4 questions. Vang Enterprises is evaluating a project which costs $105.500. Ourrently, Vang Enterprises has a beta of 2.5, the market is expected to have a 18% return and the risk-free rate is 2%. The forecasted free cash flows for the next 4 years for this project are $22,500 (FCF1), $25,800(FCF2), 33,000(FCF3), and $45,936 (FCF4). The project will cease to exist after that. Vang Enterprises's capital structure is 45% debt and 55% equity, and the applicable tax rate is 35%. The cost of debt (before taxes) can be calculated using Vang Enterprises's currently issued bond which has a face value of $1000, yearly paid coupon rate of 8%, 15 years left to maturity and a current price of $1.265.50. 1. What is the cost of equity for Vang Enterprises? 2. What is the cost of debt (before taxes) for Vang Enterprises? 3. What is Vang Enterprises's WACC (after tax)? 4. What is the NVP for this project? 5. What is the IRR of the project? 6. What is the MIRR of the cont2 10. Commercial Hydronics Incorporation is considering an asset replacement project of replacing a control device. Commercial Hydronics Incorporation can probably run it two more years before it literally falls apart. If the company does so, the device will generate cash flows of $28,000 this coming year and $28,000 the following year. Commercial Hydronics Incorporation can replace the old device with a new one for $65,000 that is more reliable, efficient and maintenance free. The new device will generate cash flows of $37,500 per year for the next 6 years. If the real opportunity cost of capital is 5%, what is the equivalent Annual Worth (EAW) for the new device? 1 O Type here to search |_ Ate - a $