PLEASE FILL OUT WITH FINANCIAL CALCULATOR KEY STROKES AND EXACT STEPS. I KNOW MORE THAN ONE QUESTION BUT YOU CAN CHARGE ME FOR MULTIPLE

1. You are considering a project which will provide annual cash inflows of $7,800, $5,750 and $8,200 at the end of each year for the next three years, respectively. What is the present value of the cash flows given a 7% discount rate?

2. Assume that the project above has an initial cost of $15,000. The company has a mandatory 3- year payback requirement and a hurdle rate of 7%. Calculate the following and determine if the project should be accepted or rejected based on the company decision criterion:

a. Payback

b. discounted payback

c. NPV

d. IRR

3. Your company is considering the purchase of an evolutionary piece of equipment. This equipment would increase sales by $90,000 each year for nine years. The use of this equipment would increase annual costs by $25,000 and the equipment would be depreciated straight line over the useful life of nine years.

[a] Assuming a tax rate of 21%, calculate net income.

[b] Calculate the Operating Cash Flow for the project.

[c] Assuming the project has an initial cost of $300,000 and lasts nine years, calculate the NPV of the project assuming a required rate of return of 10%.

[d] Calculate the Internal Rate of Return on the project.

[e] Should you accept or reject this project?

Calculating WACC Your employer is considering a project that would require a large capital investment. The company executives have asked you to provide them with the Weighted Average Cost of Capital (WACC) for the project. The company has 4 million common shares outstanding. Each share sells for $26 per share and the company just paid a dividend of $2.25 per share. Investors, analysts and stakeholders all expect the future dividends of the company to grow indefinitely by 7% per year. The stock has a beta of 1.58, the current risk-free rate is 7.5%, and the expected return on the market is 12%. Your company also has 1.5 million shares of 6% preferred stock outstanding, with these shares selling for $38 per share. The company has 170,000, 15-year, 9.8% annual bonds outstanding which are currently selling at 104.5. You can assume the corporate tax rate of 21% and the company will be able to take full advantage of any interest tax shields.

What is the firms WACC?

Do your work here:

Component weights: (Circle the weight of each):

Component costs: (Circle the cost of each):

Put your WACC formula (with your numbers) in this box. FINAL ANSWER HERE: WACC =