Based on this information

The company has 60,000 bonds with a 30-year life outstanding, with 14 years until maturity. The bonds carry a 9 percent semi-annual coupon, and are currently selling for $925.75.

You also have 100,000 shares of perpetual preferred stock outstanding, which pays a dividend of $8.00 per share. The current market price is $95.00.

The company has 7 million shares of common stock outstanding with a current price of $11.07 per share. The stock exhibits a constant growth rate of 8 percent. The last dividend (D0) was $.90.

Your firms federal + state marginal tax rate is 35%.

Your venture would consist of a new product introduction. You estimate that your product will have a six-year life span, and the equipment used to manufacture the product falls into the MACRS 5-year class. The resulting MACRS depreciation percentages for years 1 through 6, respectively, are 20%, 32%, 19%, 12%, 11%, and 6%.

Your venture would require a capital investment of $18,000,000 in equipment, plus $1,000,000 in installation costs. The venture would also result in an increase in accounts receivable and inventories of $3,000,000 (this represents an overall increase in net working capital of $3,000,000 needed to get the project started, in addition to the investment in the equipment and installation).

At the end of the six-year life span of the venture, you estimate that the equipment could be sold at a $4,800,000 salvage value.

Your venture would incur fixed costs of $1,100,000 per year, while the variable costs of the venture would equal 30 percent of revenues. You are projecting that revenues generated by the project would equal $8,000,000 in year 1, $15,000,000 in year 2, $16,000,000 in year 3, $18,000,000 in year 4, $10,000,000 in year 5, and $9,000,000 in year 6.

1. Costs of the individual capital components:

a. long-term debt (R_d) =10%

b. preferred stock (R_p)= 8.42%

c. equity (use DCF approach) (R_e)=16.78%

2. Determine the weighted average cost of capital.=12.22%

3. Compute the Year 0 initial investment for your project.=$22,000,000

prepare the 750 page report for your project team, including an analysis of the following:

• Initial costs to implement the project
• Analysis of the operating cash flows over the life of the project
• An analysis of the NPV and its meaning (stressing the importance of sticking to the budget!)
• Be sure to write the formal report in 3^rd person (dont say we, I, our or us but rather use statements that talk about the company and the project from a factual, 3^rd person perspective.
• Be sure to address the point of this report to get the project teams support in staying on budget and controlling costs so the organization does experience the cash flows as they are projected.

im sorry 750 words not pages