Question
PLEASE HELP! I have much of this case done in excel but below are the parts I am really struggling with. I can provide more
PLEASE HELP! I have much of this case done in excel but below are the parts I am really struggling with. I can provide more of my completed data if needed.
WACC Determine the cost of capital for your discounted cash flow.
Debt to Asset for this firm is 65%
Interest rate on the debt is 6.0%
Current Risk-Free Rate is 1.61%
Current Market Premium Rate is 6.89
The firms beta is 1.15
Please provide a scenario and sensitivity analysis based on the following:
Worst Case Scenario = 20% decrease in sales units sold per year: 25% Probability
Base Case Scenario = 50,000 units sold per year: 55% Probability
Best Case Scenario = 20% increase in sales units sold per year: 20% Probability
Sensitive Variables:
- Selling Price Per Unit
- Manufacturing (variable) Cost Per Unit
- Weighted Average Cost of Capital
+- 10%, 20%, 30%
How does this risk analysis effect Net Present Value? Please show the calculations.
Units Sold | Probability | |||||
Base Case | ||||||
Worst Case | ||||||
Best Case | ||||||
10 Yr US Treasury Note Yield | ||||||
Add: 700 bps | ||||||
WACC | ||||||
NPV | ||||||
IRR | ||||||
Payback | ||||||
Profitability index |
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