Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please correct values in this portion - scenario below Socnario selling a new Designer Womens Topr line. The enaff of fanencial analyma had been working

please correct values in this portion - scenario below
image text in transcribed
image text in transcribed
Socnario selling a new Designer Womens Topr line. The enaff of fanencial analyma had been working hard over the la few o celu collefefeg data and had prepared a midel creating a fiascial forecast about the propoved projech viebaing. excel spee dichet prepared for the prescntstion. What follows as sooe hase afermation that Slantel knew asd was able io fetrieve about the jroject. new Designer Womens Tops line. Doe to relatively rapil ahsaces in archalogy, the project was expected to be discentinaed in foar years. The new Desgner Womens Tops was expectod no sell for 5102 per unit and bad projected unles of 4400 anita in the firu year, with a projected (Mod-Likely scesario) 25.0% growth rate per year for miturqueat years. A toal investrent of 5792,000 for new ecuipment was required. The equipmeat had fined mainteasce ceneracts of 5346915 per year with a salvage valae of 5 122,863 and variable coss were 10% of revensec Surniel also seeded to coenisker both the Best-Case and Werit-Case senaries in the analysis with growth rates of 3500% and 2.30% remectively. working capital of $156,910 and $28,244 of tis increase woald be edisct with accounts payable. PSUWC currenty has 1053000 alases of dack outchanting at a cartent price of 75.00. Even though the company has oubtanding nock, it is pot publicly traded and Eerefore there an so pokichy swailahle finascial infermation. However, after analysis managemeat believes that its equity bea is 0.92. The company ako has 69000 bonds cubtandieg with a carreet price of 51,.927.00. The bonds pay interest semb-annually at a coapen rate of 5.40%. The bosde have a par valae of 51,000 asd will atare in 5 years. The average cerperate tax rake was 30% Management believes the SKP 500 is a reasonable proxy for the market portfolia. Therefore, the cost of equiry is calculated would calculate the monthly expecied market retarn aing Syears of pas noethy price data available in the worksheet Marketdata. This would then be muliplied by 12 to cainate the assual expected rase. Shantel remembered that if the expected rate of tearn for the market was loo low, noo high, of ne gation, a forward looking rase of an historical average of about 9.5% ? would have to be abed, as the calculated value for the curreat 5.year periad may not be rspersentative of the fuare. Shaatel previous calkubtioar uning the rilk-fice nate deta available in the workaheet Markethata. Shantel noted that the riak-free rate was on as aenual basic. Shaskl needed to cakulate the raie at which the projoct wodif have wo he discounted to calculase the Net Present Value (NPV) of the proposed project besed on the decisice of raining capital and tere cerrent capial market environment. This discount ratie, the WAOC, would obvioualy influcnce the NIV and coald affect te decilioe of whether to accept ar reject the project. Thankfully, all the information pecded wo cakcolate tiks was availbtie. Sunsel needed wo clearly show all the calculations and sources for all perameter ertimates used in the calculation of the WNCC (and altimately the NPV). Gathering all the available information, Shantel got a large cup of eatra itrong coffee aad at down to work ce the development of the Cupital Budgeting project model. The correct recenncalstioe so the board was critical to the funure growith of the firml Shantel appreciated the detaled step by sep inatruc tioas ee te Worluhcet 0. Cane Inaructives - Luckily they were seill availablett

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Finance For IT Decision Makers

Authors: Michael Blackstaff

3rd Edition

1780171226, 978-1780171227

More Books

Students also viewed these Finance questions

Question

Explain how the concept of shopper insights changed retailing.

Answered: 1 week ago

Question

1. Identify three communication approaches to identity.

Answered: 1 week ago

Question

d. Who are important leaders and heroes of the group?

Answered: 1 week ago

Question

3. Describe phases of minority identity development.

Answered: 1 week ago