AutoSaveFF A AES 5 = Fin489 Homework 2 - Making Decisions Capital Planning Home Insert Draw Page Layout Formulas Data Review View Share CE 11 A = = Insert General y Pasta u R15 Calibri (Body) B I V fx A A = E 213 Wrap Text Marge A Contar AYO TUZT Sort Find & X Filter Select D $ -% 58:98 Delete Format Candietina Fernandes Ideas Formatting as Table Styles x 4 Points! Mix of Debt and Equity - Calculating the WACC Information for calculating ABC Company's WACC: 15.00% 11.00% 40.00% Cast of common equity ins) Before-tax cost of debtirdi Margnal tax rate) Camman shares outstanding Current stock price Long-term debt sells at par value $9.00 Balance Sheet: Assets Liabilities and Equity $270.00 $190.00 Account receivable Inventories Plant and equipment, net Total $450,00 $500.00 $2,200.00 $3,420,00 papable and accruals Short-term debt Long-term debt Common equity Total liabilities and equity $150.00 $1,300.00 $1,780.00 $3,420.00 Market value oftotal debt Market value of common equity Total capital Formulas AN/A NA AN/A Porcentage of debt Parcentage of common eculty #N/A ANA After-tax cast of debt N/A Welated Average Cast af Capital (WACC) Penes Capital budgeting criteria. Calculating NPV, IRR, and MIRR - Periods Project 157501 $200il (575) $300 $500 $700 $800 $125) Project $ 750 $225 $240 $295 $400 $300 $200 0 Proiect NPY Calculations Formulas NPVA AN/A NPVB AN/A Proiect IRR Calculations IRRA IRRE Pris MIRR Canticons MRRA WHY do weuze MIRR for project A? G5 Poles) Making a Finandal Decision The Butler-Perlidns Company (BPC) must decide between two mutually exclusive projects. Each costs $7,500 and has an expected life of 5 years. Annual project Gash flows begin 1 year after the initial Investment and we subject to the following probability distributionsi Expected Life Low to Average Risk Projects - Req WACC Rinky Projects have the following Project AIR LOW to AVERAGE Project B is a RISKY project nos Probability Proba Probabil cal 1) CF. Ex Ann CF - Eup Prob (CF Em Ann CF) 2 Prob (CF-Exp Ann CF)*2 4. Ahat such pro 's Hepicted Anlash tw? Round you Std Detade C V SORT Diwiatia VOIV/0! Cul Var VDIV/01 Projecte For project A CU DIV:0! Orlaubt the Risk-Adjusted NPV for each project Remember to use minus the IV in this case to get the NPV of the Projects 990 NPV Project NPV Project B --PVC71.CH.C54,0) b. Baxud on the risk-adjusted NPV, which project should IPC AutoSaveFF A AES 5 = Fin489 Homework 2 - Making Decisions Capital Planning Home Insert Draw Page Layout Formulas Data Review View Share CE 11 A = = Insert General y Pasta u R15 Calibri (Body) B I V fx A A = E 213 Wrap Text Marge A Contar AYO TUZT Sort Find & X Filter Select D $ -% 58:98 Delete Format Candietina Fernandes Ideas Formatting as Table Styles x 4 Points! Mix of Debt and Equity - Calculating the WACC Information for calculating ABC Company's WACC: 15.00% 11.00% 40.00% Cast of common equity ins) Before-tax cost of debtirdi Margnal tax rate) Camman shares outstanding Current stock price Long-term debt sells at par value $9.00 Balance Sheet: Assets Liabilities and Equity $270.00 $190.00 Account receivable Inventories Plant and equipment, net Total $450,00 $500.00 $2,200.00 $3,420,00 papable and accruals Short-term debt Long-term debt Common equity Total liabilities and equity $150.00 $1,300.00 $1,780.00 $3,420.00 Market value oftotal debt Market value of common equity Total capital Formulas AN/A NA AN/A Porcentage of debt Parcentage of common eculty #N/A ANA After-tax cast of debt N/A Welated Average Cast af Capital (WACC) Penes Capital budgeting criteria. Calculating NPV, IRR, and MIRR - Periods Project 157501 $200il (575) $300 $500 $700 $800 $125) Project $ 750 $225 $240 $295 $400 $300 $200 0 Proiect NPY Calculations Formulas NPVA AN/A NPVB AN/A Proiect IRR Calculations IRRA IRRE Pris MIRR Canticons MRRA WHY do weuze MIRR for project A? G5 Poles) Making a Finandal Decision The Butler-Perlidns Company (BPC) must decide between two mutually exclusive projects. Each costs $7,500 and has an expected life of 5 years. Annual project Gash flows begin 1 year after the initial Investment and we subject to the following probability distributionsi Expected Life Low to Average Risk Projects - Req WACC Rinky Projects have the following Project AIR LOW to AVERAGE Project B is a RISKY project nos Probability Proba Probabil cal 1) CF. Ex Ann CF - Eup Prob (CF Em Ann CF) 2 Prob (CF-Exp Ann CF)*2 4. Ahat such pro 's Hepicted Anlash tw? Round you Std Detade C V SORT Diwiatia VOIV/0! Cul Var VDIV/01 Projecte For project A CU DIV:0! Orlaubt the Risk-Adjusted NPV for each project Remember to use minus the IV in this case to get the NPV of the Projects 990 NPV Project NPV Project B --PVC71.CH.C54,0) b. Baxud on the risk-adjusted NPV, which project should IPC