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I really struggle with this subject, please help me with these questions. thank you so much! The marketing manager at Modular Homes has requested expanding
I really struggle with this subject, please help me with these questions. thank you so much!
The marketing manager at Modular Homes has requested expanding the company's production facilities to further increase their sales for modular building. They want to be able to produce sufficient products for the local and export markets. The marketing manager have to select the best project from three alternative options and have asked for your help with this analysis. They provide you with the following cashflows for each project: Project cashflows A B investment required 1475 000 1 500 000 1 425 500 Potential inflows IY 625 000 715 000 500 000 Y2 415 000 325 000 450 000 Y3 625000 395 000 375 500 376 250 255 000 125 000 Y5 375 000 Modular Homes have a current average interest rate on their debt of 9.75% and debt represents 43% of their funding. The average return on equity has been 10.25% up to the end of last year. They know they need to evaluate the return on the projects using the WACC but are unsure of how to calculate it They have requested you to calculate the following for them: 1. What is the current WACC? (2) 2. Calculate the NPV for each project. (10) 3.Calculate the payback period of the project you believe Modular Homes should invest in to assist with their decision. (3)Step by Step Solution
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