Question
Please attached an excel worksheet showing your work and highlighting your answers. KMB does not understand why mothers only use Kleenex to wipe their kids
Please attached an excel worksheet showing your work and highlighting your answers. KMB does not understand why mothers only use Kleenex to wipe their kids noses when they could be used for so many purposes wiping dirty hands after playing in the sandbox, wiping faces after eating, etc. They are considering a $3 million investment. If they can convince mothers to use tissues more often then they believe that they can earn an additional $400,000 for the next 10 years. Additional Information: KMB plans on funding the project with debt and equity, and the allocation will be 60% debt and 40% equity. KMBs 20-year bonds trade at 95% of par, have a coupon rate of 5% paid annually. There are 10 years left till maturity and the yield on current bonds reflect the cost to raise additional debt. Based upon this information what is KMBs YTM for 10-year bonds? KMBs equity has a beta of 0.60 and has a 1% dividend yield. Assuming Rf = 2% a market risk premium of 7% what is the expected-on equity? Assume that no new equity needs to be issued. The company will need $100,000 of working capital to pursue this project. The company's effect tax rate is 25% There is no salvage value associated with the capital expenditures incurred after 10 years. Questions: (1) What is the anticiated WACC for this project? (2) What is the IRR / NPV / Payback Period on this project? (3) Determine whether to accept or reject this project? Explain your answer.
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