part1-4

Intro Tennessee Whiskey is a U.S. producer of alcoholic drinks. The company is evaluating opening a new distillery in Scotland for serving the British market. The project will last four years, after which the distillery will be sold. The company has estimated the following data: Initial investment required: 80 million After-tax salvage value in year 4: 48 million Annual depreciation: 8 million British income tax rate: 26% Fraction of after-tax income remitted to parent: 100% Withholding tax rate imposed by Britain: 0% Stock beta: 1.1 Bond interest rate: 8% Target capital structure: 60% equity and 40% debt U.S. tax rate: 26% Treasury bond yield: 2% Expected return on the S&P 500: 5% . . . . The company expects the following revenue, costs, depreciation and exchange rates: Year 0 Year 1 Year 2 Year 3 80 280 80 64 64 64 Revenue ( million) Costs ( million) Depreciation ( million) Exchange rate (per ) 8 8 8 $1.26 $1.22 $1.18 $1.14 Part 1 - Attempt 1/10 for 10 pts. What is the cash flow from assets to the subsidiary in year 3. including the after- tax salvage value of the distillery (in million)? | Attempt 1/10 for 10 pts. Part 2 What is the cash flow from assets to the parent in year 3 (in $ million)? 0+ decimals Submit Attempt 1/10 for 10 pts. Part 3 What is the cost of equity? 3+ decimals Submit - Attempt 1/10 for 10 pts. Part 4 What is the weighted average cost of capital? 3+ decimals Submit