Question
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.
- 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).
- 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.
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 58,667,000
Stockholders' Equity
Total Stockholder Equity 18,375,000
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
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Introduction to Finance Markets Investments and Financial Management
Authors: Melicher Ronald, Norton Edgar
15th edition
9781118800720, 1118492676, 1118800729, 978-1118492673
