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A firm has projected the following financials for a possible project: YEAR 0 1 2 3 4 5 Sales 129,409.00 129,409.00 129,409.00 129,409.00 129,409.00 Cost
A firm has projected the following financials for a possible project:
YEAR | 0 | 1 | 2 | 3 | 4 | 5 |
---|---|---|---|---|---|---|
Sales | 129,409.00 | 129,409.00 | 129,409.00 | 129,409.00 | 129,409.00 | |
Cost of Goods | 69,540.00 | 69,540.00 | 69,540.00 | 69,540.00 | 69,540.00 | |
S&A | 30,000.00 | 30,000.00 | 30,000.00 | 30,000.00 | 30,000.00 | |
Depreciation | 20,465.20 | 20,465.20 | 20,465.20 | 20,465.20 | 20,465.20 | |
Investment in NWC | 1,014.00 | 582.00 | 582.00 | 582.00 | 582.00 | 582.00 |
Investment in Gross PPE | 102,326.00 |
The firm has a capital structure of 41.00% debt and 59.00% equity. The cost of debt is 9.00%, while the cost of equity is estimated at 12.00%. 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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