FIND 1. Project Cash Flow (Use Cash Flow From Assets [CFFA] in Year 1 2. Project Cash Flow (Use Cash Flow From Assets [CFFA]) in Year 2 3. Project Cash Flow (Use Cash Flow From Assets (CFFA]) in Year 3 4. Cost of Equity Capital 5. Project Discount Rate (Hurdle Rate Use WACC at estimated capital structure)) 6. NPV 7. IRR 8. Payback Period 9. Discounted Payback Period 10. Average Accounting Return 11. Profitability Index 12. Do you take this project? Paragraph Styles Project Evaluation & Capital Investment Volume: 52,000 units --- 57,000 units --- 61,000 units Price: $4.50 per unit --- $4.25 per unit -- $3.85 per unit Marginal Cost: $3.25 per unit --- $2.50 per unit --- $2.20 per unit Expected Life of Project: 3 years Fixed Costs: $14,000 per year Capital requirement: $100,000 (90% depreciated over the 3-year span) Market value of equipment in 3 years: $10,000 Charge to Net Working Capital: $30,000 (at t=0, then recapture at t= 3) Tax rate: 34% 2596 Risk free rate (3-year): Total Market Return 0.70 Project Beta: Project Debt Equity Structure Cost of Debt (pretax) Droo