Capital Budgeting Example Set-up				ACCEPT
Initial investment $65,000,000				REJECT
Straight-line Depreciation of 20%
Income Tax @35%
WACC of 8% approximately. (HD WACC was about 8.83%)
Cash Flow (which in this case are Sales Revenues) are as follows:
CF1: $50,000,000
CF2: $45,000,000
CF3: $65,500,000
CF4: $55,000,00
CF5: $25,000,000
Operating Costs
CF1: $25,500,000
CF2: $25,500,000
CF3: $25,500,000
CF4: $25,500,000
CF5: $25,500,000
WACC- why do we use WACC rate for new projects? If the project doesnt earn more percent than WACC, the corporation should abandon the project and invest money elsewhere.
					Initial Investment - always negative. Corporation has to invest money ("lose" it till they recover it via sales) in order to gain future benefit.

Do you accpet or reject the NPV and IRR.....why?

27 z- Initial investment. always negative. Corporation has to invest money -lose-ittil they recover it via sales n o der to gain future Initial OutlayCF1 CF2 CF3 CF4 CFS Cash Flows (Sales) Operating Costs (excluding Depreciation Depreciation Rate of 20% perating Income (EBIT) After-Tax EBIT Depreciation Cash Flows $0 downs below: NPV $0.00 IRR Err:523 1Time Velue of Money /2 Stock and Bond Valuation 3 Capital Budgeting Data4 Interest Rate Implications SUMMARY et 3/5 PageStyle 3 Capital Budgeting Data STD