corporate finance

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This is a comprehensive ptoje.l evaluation problem bringing together much of what you have learned in this and been hired a. to [Mense (DE]). a large. publicly traded firm that is the Share leader in is looking Setting up a manufacturing line RDSs_ This will a ago f.u $2.7 millim in of using it a toxic dump site for wage chemiculs. but it built a piping system to safely discard the chemicals instead. land for S3,8 million an basis. In five years, the after-tax &alue of the land will he million. bul the company expects [o keep the land for a future wants 'o build manufacturing plant this will to buill follc_ming data DEJ'S arc current: with a coupon rate of outstanding. 25 years to wlling of tbc hwc a par value each and make semi. annual Stock: 8. I cnitsuulding. gelling for S63 beta is I. 450.1") of 4.2S strk riling fw $83 7 expected risk premium; 3.1 risk. free DEI G.M. as its Wlwton DEI of stmk 5 debt all with its profit) setting DEI t to the plant hy issuing new shares ot-common DEI'S ratc is 25 Thc proint in initial uking investment to get Awrnc DE I ehtermlly_ a. Calculate the project s initial Time O cash flow. c (MIS idering all Side effects. (2S marks) b. RDS ptojt is a DEL primuily is twing told to of 2 account for this riskiness. Calculate the rate to use When DEI'S project. ( 3S marks) c. The manufacturing plant h'" an tax life. and DEI Straightlitw depreciation a At end of tlk is. of Yeu 5). plant can be scramed for million. What the xftertax salvage value of this marks) plant and d, Tbc company will incur S6_9 million in annual fixed costs, Thc plan is to 12, I OO RDSs per year and sell them S I I ,4SO per the variable production eosts am RDS. What is Olmting (OCF) this (S marks) e. DEIs to all into the for the r.nancial officer; all hc know is what the RDS project s rate Of return I IRR) and net present value (NPV) are. What Will (20 marks)