Company A is considering a 4-year project. They own a piece of land that could be sold for $100,000. They hired an engineer to evaluate it and she has approved it for building a new factory. The engineer billed the company for $15,000. Building a new factory will cost $776000 and the new product is estimated to result in $439000 in annual sales. It will reduce the sales of the existing product by $50,000, and it will have an annual cost of $100,000 The project will be depreciated straight line to $200,000 over 5 years, and it will have a salvage value at the end of the project of $138000. For this project the company will issue a bond and it will cost the company $60,000/year in interest. The factory also requires an initial investment in spare parts inventory of $71000, along with an additional $11100 in inventory for each succeeding year of the project. The company's tax rate is 0.35. This company also has $620,000 shares of common stock outstanding. The current share price is $75.39, and the book value per share is $6.95. This company also has two bond issues outstanding. The first bond issue has a face value of $67000000, has a 0.05 coupon, matures in 10 years and sells for 83 percent of par. The second issue has a face value of $64000000, has a 0.06 coupon, matures in 20 years, and sells for 92 percent of par. The most recent dividend was $2.60 and the dividend growth rate is 0.07. Both bonds make semiannual payments. The risk-free rate is 3% and his company has a beta of 1.2. The return of the market is 10%. This project is considered to be riskier than the companys existing operations and the company evaluates riskier projects by adding a 2% premium to its WACC. Calculate the NPV and the IRR of this Project. Should the company take this project?

Use this Excel file and fill out all the highlighted boxes.

prehensive Project for WACC and NPV ppany A is considering a 4-year project. They own a piece of land that could be sold for $100,000. They hired an ineer to evaluate it and she has approved it for building a new factory. The engineer billed the company for ,000. Building a new factory will cost $776000 and the new product is estimated to result in $439000 in annual s. It will reduce the sales of the existing product by $50,000, and it will have an annual cost of $100,000 The ject will be depreciated straight line to $200,000 over 5 years, and it will have a salvage value at the end of the ject of $138000. For this project the company will issue a bond and it will cost the company $60,000/ year in rest. The factory also requires an initial investment in spare parts inventory of $71000, along with an additiona 100 in inventory for each succeeding year of the project. The company's tax rate is 0.35 . ; company also has $620,000 shares of common stock outstanding. The current share price is $75.39, and the k value per share is $6.95. This company also has two bond issues outstanding. The first bond issue has a face Ie of $67000000, has a 0.05 coupon, matures in 10 years and sells for 83 percent of par. The second issue has a ? value of $64000000, has a 0.06 coupon, matures in 20 years, and sells for 92 percent of par. most recent dividend was $2.60 and the dividend growth rate is 0.07 . Both bonds make semiannual payments. risk free rate is 3% and his company has a beta of 1.2 . The return of the market is 10%. ; project is considered to be riskier than the company's existing operations and the company evaluates riskier jects by adding a 2% premium to its WACC. iulate the NPV and the IRR of this Project. Should the company take this project