Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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_2

Step: 3

blur-text-image_step3

Ace Your Homework with AI

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

Get Started

Students also viewed these Finance questions

Question

=+What's the purpose of the piece?

Answered: 1 week ago

Question

=+What benefits are there in direct mail?

Answered: 1 week ago

Question

=+How will this product help them?

Answered: 1 week ago