Hello, I am working on this project but I am having some trouble. Attached are the financial statements if you need information off of them.

Mary Francis has just returned to her office after attending preliminary discussions with investment bankers. Her last meeting regarding the intended capital structure of Apix went well, and she calls you into her office to discuss the next steps.

?We will need to determine the required return for our intended project so that we have a decision criteria defined for the project,? she says.

?Do you have the information I need to describe capital structure and to calculate the weighted average cost of capital (WACC)?? you ask.

?I do,? she smiles. ?We can determine the target WACC for Apix Printing Inc., given these assumptions,? she says as she hands you a piece of paper that says the following:

• Weights of 40% debt and 60% common equity (no preferred equity)
• A 35% tax rate
• Cost of debt is 8%
• Beta of the company is 1.5
• Risk-free rate is 2%
• Return on the market is 11%

?Great,? you say. ?Thanks.?

?Be sure to indicate how these costs of capital might be used to determine the feasibility of the capital project,? Mary says. ?I want your recommendation about which is more appropriate to apply to project evaluation, too. Let me know what you think.?

?One more thing,? she says as she stands up to signal the end of the meeting. ?You did a good job with the explanations that you provided Luke the other day. Would you have time to definemarginal cost of capitalfor me so I can include it in my discussions with investors? You seem to have a knack for making things accessible to nonfinancial folks.?

?No problem,? you say. ?I?m glad my explanations are so useful!?

For this assignment, complete the following:

• Describe capital structure.
• Determine the WACC given the above assumptions.
• Indicate how these might be useful to determine the feasibility of the capital project.
• Recommend which is more appropriate to apply to project evaluation.
• Definemarginalcostofcapital.

Deliverable Length:750?1,000 words

At least 3 references

Thank you!

Apex Printing Balance Sheets As of December 31, 2013 and 2012 Assets Cash Accounts Receivable Inventory Total Current Assets Land Building & Equipment Less: Accumulated Depreciation - Building & Equipment Total Long Term Assets Total Assets 000$ 000$ 2013 6,000 2,350 12,100 20,450 2012 5,700 2,300 6,500 14,500 25,000 20,000 300,000 300,000 (187,850) (160,000) 137,150 160,000 157,600 174,500 Liabilities and Stockholders' Equity Accounts Payable Salaries Payable Interest Payable Short Term Notes Payable Taxes Payable Total Current Liabilities 4,600 0 1,500 12,000 0 18,100 3,500 2,100 0 0 5,600 11,200 Mortgate Payable Total Long Term Liabilities 54,950 54,950 100,000 100,000 60,000 24,550 84,550 157,600 60,000 3,300 63,300 174,500 Common Stock Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity Apex Printing Income Statements For the Periods Ended December 31, 2013 and 2012 Revenue: Less: Cost of Goods Sold Less: Depreciation Expense Gross Margin Selling, General & Administrative Expenses Income Before Interest & Taxes Interest Expense Income Before Taxes Income Taxes Net Income 000$ 000$ 2013 2012 450,000 475,000 (324,300) (374,500) (27,850) (26,000) 97,850 74,500 (29,100) (32,000) 68,750 42,500 (7,500) (6,000) 61,250 36,500 (35,000) (30,000) 26,250 6,500 Apex Printing Statement of Cash Flows For the Period Ended December 31, 2013 000$ Cash Flows from Operating Activities: Net Income Adjustments to reconcile net income to net cash provided by operating activities Depreciation Expense Increase in accounts receivable Increase in inventory Decrease in salaries payable Increase in interest payable Decrease in taxes payable Increase in Short Term notes Payable Increase in accounts payable Net Cash Flow from Operating Activities Cash Flows from Investing Activities: Cash paid to purchase land Net Cash Flow from Investing Activities 26,250 27,850 (50) (5,600) (2,100) 1,500 (5,600) 12,000 1,100 55,350 (5,000) (5,000) Cash Flows From Financing Activities: Cash paid for mortgage Cash paid for dividends Net Cash Flow from Financing Activities Net Increase in Cash Plus: Cash Balance at December 31, 2012 Cash Balance at December 31, 2013 (45,050) (5,000) (50,050) 300 5,700 6,000