Based on the data using 8% for cost of capital, debt after tax is 4%, Risjk free Rate of return 3.5%, Market risk premium is 5%,

debt = $1.95 Billion

stock price=$44.28

shares outstanding=28.15 million

Beta 1.350

What is the weighted average cost of capital?

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What is the average debt levels ($)?

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YEAR 1 2 3 4 5 6 7 Acquisition Stage Assumptions: Research & Development Costs $ 160.000,0001 Initial Promotion (24.000.0001 Expenses related to new supply network [2.000.0001 Employee Training (72.000.0001 Vendor Testing (1.500,0001 Additional investment in working capital ($ of sales: 92] 9.007 9.003 9.003 9.003 9.003 9.003 9.003 9.003 9.003 Working Capital Balance 18.000 000 18.820.000 19.500.000 $9.820.000 $10.628.000 $10.959.999 $11.420.000 $11.780.000 $12.199.000 Incremental investment in working capital $ (8 000.000) $ [820.000) $ [680 000) $ (320.000] $ (808 000) $ (371.999) $ (420.0011 $ (360 0001 $ [419.0001 Operating Stage Assumption 3 Additional sales of new product growth in 2-8 years $450.000.000 52 52 42 42 42 Lost sales of existing products growth in 2-8 pears $10.000,000 $10.000,000 $10.000 000 $10.000.000 $10.000,000 $10.000.000 $10.000,000 $10.000.000 Variable cost of new product (593] 592 592 592 592 592 592 593 Additional fixed cost associated with new products 1,000 000 1.000.000 1.000.000 1,000 00 0 1.000.000 1.000.000 1.000,00 0 1.000.000 Tax rate 242 242 243 242 242 242 242 242 Continuing stage cash flows Aquisition Stage Cash Flows 0 2 3 5 6 8 Research and Development cost (60.000 0001 Initial Promotion (24.000.0001 Expenses related to the new supply network (2.000,0001 Employee Training (72.000.0001 Vendor Testing (1.500.0001 Additional Investement in working Capital 18.000 0001 820.000 680.000 320.000 808,000 307.000 185.000 360.000 419.000 Total Aquisition Stage of Cash Flows [167.500.0001 [820.0001 [680.0001 (320.0001 (808 0001 (307.0001 (185.0001 (360.0001 (419.0001 Operating Stage Cash Flows Additional sales in new products $450.000.000 $450.786.005 $450.790.870 $450.795.735 $450.800.600 $450.805.465 $450.810.330 $450.815.195 Lost sales of existing product (10.000.000) $ (10.000,0001 $ (10.000,0001 (10.000 000) $ (10.000 000) $ (10.000,000) $ (10 000 000) $ [10.000,0001 Variable cost of new product 265.500.000 $265.825.870 $266.151.740 $266.477.610 1266.803.480 $267.129.350 1267.455.220 $267.781.090 Additional fixed cost associated with new products (1.000 0001 $ (1.000 0001 $ (1.000 0001 $ (1.000 000) $ (1,000.000) $ (1,000,000) $ (1,000,0001 $ (1.000 00 01 Tax Income $704.500.000 $705.611.875 $705.942.610 $706.273.345 $706.604.080 $706.934.815 $707,265.550 $707.596,285 Taxes (169 080 000) 1 (169, 346 850] 4 (169 426,226) 1 (169 505,603) $ 169 584,979] $169.664,356) $ 169.743,732] (169 823.108] After Tax Income $ 873.580.000 $ 874.958.725 875.368.836 $ 875.778,948 $ 876.189.059 1 876.599.171 $ 877.009 282 877.419.393 Continuing Stage 2 3 6 Continuing Value 14.387.096.967 Total Cash Flows $ (167.500.000) $ 872,760,000 $ 874.278.725 $ 875.048.836 $ 874.970,948 $ 875.882.059 $ 876.414.171 $ 876.649.282 $ 5.264.097.360Cost of Capital 8% Cummalative Cash Flows PV 8% YR NVP ($167,500,000) NVP $ 7,231,880,595 (167,500,000) 1.000000 (167,500,000) $872,760,000 705,260,000 0.925926 808, 111, 111 $874,278,725 PI $ 1.02 1,579,538,725 0.857339 749,553,091 $875,048,836 2,454,587,561 0.793832 694,641,979 $874,970,948 IRR 521% 3,329,558,509 0.735030 643,129,767 5875,882,059 S 4,205,440,568 0.680583 596, 110,612 5876,414,171 Payback 0.191920 S 5,081,854,739 0.630170 552,289,591 $876,649,282 5,958,504,021 0.583490 511,516,436 $5,264,097,360 NVP Payback 0.207273 11,222,601,381 0.540269 2,844,028,009