Forcefully Delicious Cookies has decided to offer Moms SUPER special Cookies. I could just sell the recipe itself for $5k. FDC thinks that the new cookie will generate $200,000 in incremental sales per year in year 1, and sales will increase 10% a year. Fixed costs will be $15,000 per year, and variable costs will be approximately 30% of sales. The additional capital investment in the kitchen equipment (that will be capitalized) needed to produce the new cookies will cost $200,000 and will be depreciated in a straight-line manner for the 4 years of the cookies life assume no salvage value.

1.What are the cash flows and the NPV- (on excel)

2.What is the IRR?

3.What is the NPV

4.ACCEPT OR REJECT THIS INVESTMENT?

5.at what WACC would you reject the project?