2021 Balance Sheet (thousands of dollars) Part I. Weighted Average Cost of Capital (WACC) The Acme Company is in the business of manufacturing plastic children's toys. The company is considering expanding its operations by acquiring a new extruding machine. The machine under consideration has a base price is $575,000, including shipping and installation. It will cost another $25,000 to modify it for special use by Acme. The new machine is highly automated and Acme expects to spend $10,000 training employees to use it. The machine has a MACRS 3 year recovery period, and it would be sold after 3 years for $100,000. The machine will increase toy production, so it will require an increase in net working capital (inventory) of $10,000. Based on the information above, calculate the following: A. cost of debt (rd), cost of preferred stock (rps), and cost of common equity (rce); Due to the increased production, Acme expects its sales revenues to increase by $75,000 in year B. proportion of debt (wd), proportion of preferred stock (wps), and proportion of common 1, $85,000 in year 2 , and $95,000 in year 3 . It is also expected to save the firm $42,000 per year in before-tax operating costs, mainly labor. C. weighted average cost of capital (WACC): D. initial cash flow, all operating cash flows, and terminal cash flow; Acme's marginal tax rate is 25%. E. net present value (NPV) and internal rate of retum (IRR) As a part of the decision process, Acme is estimating its weighted average cost of capital Should Acme purchase the extruding machine? Why? In your answer, be sure to refer to BOTH (WACC), based on the following information: 2. Acme can issue corporate bonds with $1,000 par value and 8% annual coupon MACRS Depreciation Schedule rate. Coupon payments will be made semiannually. The bonds will have a maturity of 15 years. The current market price of similar bonds is 92.50% of par value. 3. Acme has no outstanding preferred stock and there are no plans to issue any. 4. Acme's common stock is currently selling at $50 per share. Dividends are paid semiannually. Its next expected (upcoming) semiannual dividend (D1) will be $3.50 per share and investors expect the dividend to grow at a constant 4% annual rate into the foreseeable future (i.e., forever or for a really long time)