BALANCE SHEET

12/31/2018

Current Assets

Cash And Cash Equivalents 8,719,000

Short Term Investments 270,000

Net Receivables 7,140,000

Inventory 3,126,000

Other Current Assets 2,042,000

Total Current Assets 21,297,000

Long Term Investments 2,407,000

Property Plant and Equipment 17,587,000

Goodwill 14,806,000

Intangible Assets 15,823,000

Other Assets 5,122,000

Total Assets 77,042,000

Current Liabilities

Accounts Payable 7,211,000

Short/Current Long Term Debt 3,951,000

Other Current Liabilities 6,601,000

Total Current Liabilities 17,763,000

Long Term Debt 28,293,000

Other Liabilities 12,611,000

Total Liabilities 58,667,00

Stockholders' Equity

Total Stockholder Equity 18,375,000

INCOME STATEMENT

31/12/2018

Revenue

Total Revenue 51,728,000

Cost of Revenue 23,502,000

Gross Profit 28,226,000

Operating Expenses

Selling General and Administrative 19,184,000

Operating Income or Loss 9,042,000

Income from Continuing Operations

Other Income/Expenses Net. -1,148,000

Interest Expense 1,220,000

Income Before Tax 6,674,000

Income Tax Expense 2,696,000

Net Income 3,978,000

PROJECTS

Year 0 Year 1 Year 2 Year 3 Year 4

Project A -100,000 50,000 30,000 30,000 20,000

Project B -250,000 100,000 100,000 50,000 50,000

Project C -500,000 400,000 50,000 50,000 50,000

WACC and Capital Budgeting

1. Calculate the firm's WACC (using 2018 numbers). (You will need to collect information on the long-term debt and common stock equity from the Balance Sheet. The firm has no preferred stock).
2. Use the WACC to calculate NPV and evaluate IRR for proposed capital budgeting projects. Assume the projects are mutually exclusive and the firm has the money available to fund the project.

Analysis

Offer suggestions to a senior financial manager and CFO on the proposed projects. Be sure to include a discussion of external funding and where it should come from if necessary and which project the firm should undertake.