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Berkshire Inc. is planning to invest in a project which entails a cash outlay of $ 1 7 5 , 0 0 0 and expects
Berkshire Inc. is planning to invest in a project which entails a cash outlay of $ and expects acash flow of $year for the next four years. The before tax cost of debt is while the tax ratefor the company is The current share price for Berkshires stock is $ pershare and theexpected dividend next year is $ per share. Berkshires expected growth rate is and theyfinance the project with newly issued equity and debt, while the flotation costs for equity areConsider that Berkshire is considering another project worth $ million which will be financed withdebt worth $ million and $ million in equity stock equal to the company's current capitalstructure The beforetax required return on debt is after tax and for equity. Themanagement requires expert opinion on the feasibility of the proposed projects for which they appointyou as a financial consultant to assist the management in taking some financial decisions. Perform a sensitivity analysis to know the impact of a increase and decrease in initial investment excluding floatation cost on NPV for the first project. Also find the Breakeven NPV using excel
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