Question
A firm has projected the following financials for a possible project: YEAR 0 1 2 3 4 5 Sales 134,682.00 134,682.00 134,682.00 134,682.00 134,682.00 Cost
A firm has projected the following financials for a possible project:
YEAR | 0 | 1 | 2 | 3 | 4 | 5 |
---|---|---|---|---|---|---|
Sales | 134,682.00 | 134,682.00 | 134,682.00 | 134,682.00 | 134,682.00 | |
Cost of Goods | 68,187.00 | 68,187.00 | 68,187.00 | 68,187.00 | 68,187.00 | |
S&A | 30,000.00 | 30,000.00 | 30,000.00 | 30,000.00 | 30,000.00 | |
Depreciation | 21,159.60 | 21,159.60 | 21,159.60 | 21,159.60 | 21,159.60 | |
Investment in NWC | 1,166.00 | 572.00 | 572.00 | 572.00 | 572.00 | 572.00 |
Investment in Gross PPE | 105,798.00 |
The firm has a capital structure of 45.00% debt and 55.00% equity. The cost of debt is 8.00%, while the cost of equity is estimated at 15.00%. The tax rate facing the firm is 37.00%. (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?Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924))
What is the cash flow for year 0? (express answer as a negative...)Answer format: Currency: Round to: 2 decimal places.
What is the cash flow for year 1?Answer format: Currency: Round to: 2 decimal places.
What is the NPV of the project? (Hint: Be careful about rounding the WACC here!)Answer format: Currency: Round to: 2 decimal places.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started