Question
Lily Company has a marketing opportunity that will cost $518,867, it will increase net income by $242,867 the first year, $243,320 the second year, $281,188
Lily Company has a marketing opportunity that will cost $518,867, it will increase net income by $242,867 the first year, $243,320 the second year, $281,188 the third year and $233,328 the fourth year. Using the WACC as the discount rate what is the overall profit or loss of this marketing campaign in todays dollars?
Lily has issued 19,077 $1000 face value bonds currently selling at 100% of par. They have 1,090,152 shares of common stock outstanding currently selling at $60 and no preferred stock. The after tax cost of debt is 3.76% and cost of equity is 15%.
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