Calculate the WACC for the firm you have been allocated (see attached excel spreadsheet). You required to: - Calculate the WACC for the firm you have been allocated. - Choose the most appropriate methods/data for estimating cost of debt, cost of equity and target capital structure - Explain and justify your choice of methods/data. - Briefly explain and justify the method/data used to estimate the target capital structure. - Briefly explain and justify the method and data used to estimate cost of debt. - Briefly explain and justify the choice of method/data used to estimate cost of equity. - Reference ALL sources of data and information Part B. (5 marks ) Estimate the net present value of the project below by using the WACC calculated in Part A as your discount rate. You are also required to indicate whether the project should be accepted. (Important: You must show all your workings/calculations) Additional information: - The firm paid 2m in market research fees (nonrefundable) in order to gain a better understanding of the potential revenues to be gained by undertaking this project. - The project is believed to reduce cash inflows from other projects by 100,000 annually for the next 5 years (i.e. from year 1 to year 5 ) due to cannibalization of sales. Calculate the WACC for the firm you have been allocated (see attached excel spreadsheet). You required to: - Calculate the WACC for the firm you have been allocated. - Choose the most appropriate methods/data for estimating cost of debt, cost of equity and target capital structure - Explain and justify your choice of methods/data. - Briefly explain and justify the method/data used to estimate the target capital structure. - Briefly explain and justify the method and data used to estimate cost of debt. - Briefly explain and justify the choice of method/data used to estimate cost of equity. - Reference ALL sources of data and information Part B. (5 marks ) Estimate the net present value of the project below by using the WACC calculated in Part A as your discount rate. You are also required to indicate whether the project should be accepted. (Important: You must show all your workings/calculations) Additional information: - The firm paid 2m in market research fees (nonrefundable) in order to gain a better understanding of the potential revenues to be gained by undertaking this project. - The project is believed to reduce cash inflows from other projects by 100,000 annually for the next 5 years (i.e. from year 1 to year 5 ) due to cannibalization of sales
