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All answers must be prepared on an Excel spreadsheet with supporting calculations documented. 1 ) . Using the following data: Initial Investment = $ 1

All answers must be prepared on an Excel spreadsheet with supporting calculations documented.
1). Using the following data:
Initial Investment = $10,000,000
Cash Inflow Year 1= $3,000,000
Cash Inflow Year 2= $3,500,000
Cash Inflow Year 3= $4,000,000
Cash Inflow Year 4= $4,900,000
Cash Inflow Year 5= $5,000,000
a. Calculate Internal Rate of Return
b. Calculate Net Present Value (assuming a required return of 8%)
2). Using the following data:
Debt
o Market value - $7,000,000
o Current yield to maturity 8%
Equity
o Market value - $35,000,000
Tax rate 35%
Expected return on market 10%
Current 10 year US Treasury 2.3%
Beta 1.60
a. Construct a pie chart of the firms capital structure (market values)
b. Calculate weighted average cost of capital
3). Using the following free cash flow data:
Year Cash Flow
2019 $3,000,000
2020 $3,400,000
a. Calculate the growth in cash flow between 2019 and 2020
b. Prepare a 5 year cash flow forecast based upon the rate of growth in cash flow (2021-2025)
c. Calculate the net present value of the forecasted cash flows assuming an investment cost of $18,500,000 in the beginning of 2021
Estimate cost of capital using the following data:
Market value of debt - $600,000
Market value of equity - $1,400,000
Current yield on debt 7.3%
Tax rate 35%
Expected market return 12%
Current 10 year US Treasury 3.8%
Beta 2.1
d. State your opinion on whether you would make the investment and why?

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