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A firm has projected the following financials for a possible project: YEAR 0 1 2 3 4 5 Sales 124,618.00 124,618.00 124,618.00 124,618.00 124,618.00 Cost
A firm has projected the following financials for a possible project:
YEAR | 0 | 1 | 2 | 3 | 4 | 5 |
---|---|---|---|---|---|---|
Sales | 124,618.00 | 124,618.00 | 124,618.00 | 124,618.00 | 124,618.00 | |
Cost of Goods | 64,490.00 | 64,490.00 | 64,490.00 | 64,490.00 | 64,490.00 | |
S&A | 30,000.00 | 30,000.00 | 30,000.00 | 30,000.00 | 30,000.00 | |
Depreciation | 22,617.80 | 22,617.80 | 22,617.80 | 22,617.80 | 22,617.80 | |
Investment in NWC | 1,213.00 | 529.00 | 529.00 | 529.00 | 529.00 | 529.00 |
Investment in Gross PPE | 113,089.00 |
The firm has a capital structure of 48.00% debt and 52.00% equity. The cost of debt is 8.00%, while the cost of equity is estimated at 13.00%. The tax rate facing the firm is 38.00%. (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 NPV of the project? (Hint: Be careful about rounding the WACC here!)
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