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andrew auto patents a windshield. andrew expectets to redesign one of its opersting plants to begind production. cost of contruction and equipment is expected 500
andrew auto patents a windshield. andrew expectets to redesign one of its opersting plants to begind production. cost of contruction and equipment is expected 500 million. the windshield is expected to be a market leader for 4 years then market share will essentially drop to 0. they expext to generate 141 million per year in ocf (ordinary annuity). they donate 6 million of ocf in year 2 and 2 million in year 3
they have sructure of 205 million in bond issue that matures in 4 years and yield to maturity is 5.9. the tax rate is 21%. they use CAPM to eliminate cost of equity and has determined to be 11.7%
1. compute WABC
2. compute NPV, IRR, and MIRR and draw profile
3. explain manner in which systamatic risk plays role in rhis capital budget project
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