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Can you please help and show work for calculations? The company has the following capital structure: Account $ Costs before tax Long-term Debt 2,000,000 10%
Can you please help and show work for calculations?
The company has the following capital structure:
Account | $ | Costs before tax |
Long-term Debt | 2,000,000 | 10% |
Preferred Stock | 500,000 | 14% |
Common Stock | 2,500,000 | 18% |
- Calculate the weighted average cost of capital (WACC) with a tax rate of 36%.
- Using the same cash flows in exhibit I find the NPV, PI, IRR and MIRR (Use the WACC you have computed above). Which project(s) would you recommend and why (show your calculations)? (Initial Investment $2,000)
Exhibit I
Sum of cash flow | ||||||||
benefits | $ 3,310.00 | $ 7,165.00 | $ 9,000.00 | $ 3,561.00 | $ 4,200.00 | $ 6,200.00 | $ 4,560.00 | $ 4,150.00 |
Excess of cash flow | ||||||||
Over investment | $ 1,310.00 | $ 5,165.00 | $ 7,000.00 | $ 1,562.00 | $ 2,200.00 | $ 4,200.00 | $ 2,560.00 | $ 2,150.00 |
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