Can you please solve? I need this by 11:59 PM Eastern

Short Application problem 1 - part 2 1) Calculate the new WACC We are told: Weights of 70% debt and 30% common equity (no preferred equity); this essentially reverses their previously calcula A 35% tax rate The cost of debt is now 9% due to an additional default risk premium The beta of the company is 1.3 The risk free rate is 2% The return on the market is 12% First calculate the expected cost of equity determined using the CAPM: CAPM = Risk Free Rate + Equity Beta * Market Risk Premium And we need to remember that market risk premium = Return on Market - Risk free rate So CAPM = Rrf + (beta*(retrurn on market - Rrf) Next calculate the WACC of the firm: WACC = (Weight Debt * Cost of Debt) + (Weight Equity * Cost of Equity ) and remember to calculate the cost of debt as Cost od debt*(1-Tax rate) 2) Calculate the cash flows for the new crystal jewelry project given the following assumpt Initial investment outlay of $25 million, comprised of $20 million for machinery with $2 million for net working capital f Project and equipment life is 5 years Revenues are expected to increase $25 million annually Gross margin percentage is 40% (not including depreciation) Depreciation is computed at the straight-line rate for tax purposes Selling, general, and administrative expenses are 5% of sales Tax rate is 35% Compute net present value and internal rate of return of the project Year 0 1 Revenues Gross Margin Sales & Admin Depreciation NWC Increase NWC Recovery Capital Expenditures FCF Tax Discount Rate 35% Wacc as found in part A = CFo + (NPV(WACC,FCF1,FCF2,FCF3,FCF4,FCF5) NPV Use NPV Formula IRR Use IRR formula =IRR(Cfo:Cf5) 3) Calculate the cash flows for the new crystal jewelry project given the same assumptions Year 0 1 Revenues Gross Margin Sales & Admin Depreciation NWC Increase NWC Recovery Capital Expenditures FCF Tax Discount Rate 35% Wacc as found in part A = CFo + (NPV(WACC,FCF1,FCF2,FCF3) NPV Use NPV Formula IRR Use IRR formula =IRR(Cfo:Cf5) entially reverses their previously calculated capital structure isk free rate ct given the following assumptions: y with $2 million for net working capital for metal inventory and $3 million for crystals 2 3 4 ound in part A NPV(WACC,FCF1,FCF2,FCF3,FCF4,FCF5) or =C56+NPV(C59,D56:H56) or = IRR(C56:H56) ct given the same assumptions in part 2 but considering a 3 year option 2 3 ound in part A NPV(WACC,FCF1,FCF2,FCF3) or =C81+NPV(C59,D78:F78) or = IRR(C78:F78) 5 Comments 25m per year 40% of revenues 5% of revenues 20 million over 5 years 5 million out year 0 5 million recovered end of project 20 Million FCF=((Gross Margin-Sales&Admin)*(1-tax rate))+(Depreciation*tax rate)-NWC Increase - Capex + NWC recovery at end of proje Comments 25m per year 40% of revenues 5% of revenues 20 million over 3 years 5 million out year 0 5 million recovered end of project 20 Million FCF=((Gross Margin-Sales&Admin)*(1-tax rate))+(Depreciation*tax rate)-NWC Increase - Capex + NWC recovery at end of proje recovery at end of project recovery at end of project