MBA Corp plans to use is idle building that can potentially be rented for $15,000 per annum to set up a manufacturing machinery there The current Revenue of MBA Corps $500,000. If the company takes up this project, its revenue expected to increase by 30% for the next three years and then double from the Ird year love for the next two years After 5 years, the project wil be scrapped and the salvage value is expected to be $80,000 The COGS are expected to remain the same at Sok of revenue, The SGSA and other operating costs will increase by $10,000 The cost of the machinery expected to be $250,000. The machinery Installation cost is expected to be $20,000. This investment will require additional Inventory of $40,000 and increase the count posible by $20,000 The company spent $500 in researching the viability of the building for machine Installation. The company hires you as a financial manager to advise they should take up this project or not Other Information Full 100% depreciation is taken for the CAPEX in the year in which it is done Tax rate= 25% For calculating WACC, please use the below wormation Cout of new Date: BN Cost of Preferred Shares Cost of Equity: Need to calculate Beta - 1.2 R1-28 RMAT Target Capital Structures Debt: Preferred Sh: Equity 3:1:6 1 Calculate IRR (You can use calculator or the excel formula) 2 Calculate MIRR (You can use calculator or the excel formula 3 What is conclusion should the project be undertaken or not? Why? MBA Corp plans to use is idle building that can potentially be rented for $15,000 per annum to set up a manufacturing machinery there The current Revenue of MBA Corps $500,000. If the company takes up this project, its revenue expected to increase by 30% for the next three years and then double from the Ird year love for the next two years After 5 years, the project wil be scrapped and the salvage value is expected to be $80,000 The COGS are expected to remain the same at Sok of revenue, The SGSA and other operating costs will increase by $10,000 The cost of the machinery expected to be $250,000. The machinery Installation cost is expected to be $20,000. This investment will require additional Inventory of $40,000 and increase the count posible by $20,000 The company spent $500 in researching the viability of the building for machine Installation. The company hires you as a financial manager to advise they should take up this project or not Other Information Full 100% depreciation is taken for the CAPEX in the year in which it is done Tax rate= 25% For calculating WACC, please use the below wormation Cout of new Date: BN Cost of Preferred Shares Cost of Equity: Need to calculate Beta - 1.2 R1-28 RMAT Target Capital Structures Debt: Preferred Sh: Equity 3:1:6 1 Calculate IRR (You can use calculator or the excel formula) 2 Calculate MIRR (You can use calculator or the excel formula 3 What is conclusion should the project be undertaken or not? Why
