Question
A firm has projected the following financials for a possible project: YEAR 0 1 2 3 4 5 Sales 138,377.00 138,377.00 138,377.00 138,377.00 138,377.00 Cost
A firm has projected the following financials for a possible project:
| YEAR | 0 | 1 | 2 | 3 | 4 | 5 |
|---|---|---|---|---|---|---|
| Sales | 138,377.00 | 138,377.00 | 138,377.00 | 138,377.00 | 138,377.00 | |
| Cost of Goods | 68,022.00 | 68,022.00 | 68,022.00 | 68,022.00 | 68,022.00 | |
| S&A | 30,000.00 | 30,000.00 | 30,000.00 | 30,000.00 | 30,000.00 | |
| Depreciation | 23,729.00 | 23,729.00 | 23,729.00 | 23,729.00 | 23,729.00 | |
| Investment in NWC | 1,093.00 | 516.00 | 516.00 | 516.00 | 516.00 | 516.00 |
| Investment in Gross PPE | 118,645.00 |
The firm has a capital structure of 47.00% debt and 53.00% equity. The cost of debt is 10.00%, while the cost of equity is estimated at 14.00%. The tax rate facing the firm is 35.00%. (Assume that you can't recover the final NWC position in year 5. i.e. only consider the change in NWC for each year)
What is the WACC for the project?
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Financial Modeling An Introductory Guide To Excel And VBA Applications In Finance
Authors: Joachim Häcker, Dietmar Ernst
1st Edition
1137426578, 978-1137426574
