Cashflowtable

Year Cash Flow

2014 $1,500,000

2015 $2,300,000

2016 $3,000,000

2017 $3,400,000

2018 $1,800,000

1. Calculate geometric total return
2. Annualized rate of return
3. Prepare a 10 year cash flow forecast based upon the annualized rate of growth in cash flow
4. Calculate the net present value of the forecasted cash flows assuming an immediate investment cost of $18,500,000
   1. Estimate cost of capital using the following data:
      • Market value of debt - $600,000
      • Market value of equity - $1, 400,000
      • Current yield on debt - 7.3%
      • Tax rate - 35%
      • Expected market return - 12%
      • Current 10 year US Treasury - 3.8%
      • Beta - 2.1