PLEASE HELP ME WITH THIS ONE..

Signature Assignment - Capital Budgeting Course Project Work must be done in Excel. Please show formulas if possible so I can get a true understanding of the deliverables.

You have recently assumed the role of CFO at your company. The company's CEO is looking to expand its operations by investing in new property, plant, and equipment. You are asked to do some capital budgeting analysis that will determine whether the company should invest in these new plant assets.

Signature Assignment Parameters - select a company download the most recent copy of the company's 10-K report and submit your company choice to your professor for approval. (Saxton company was selected as 12/31/19) which was approved by my instructor.

Income Statement

For the Year Ended December 31, 2009

Sales (all on credit) $ 4,000,000

Cost of Goods Sold3,000,000

___________

Gross Profit.$ 1,000,000

Selling and Administrative Expenses. 450,000

_____________

Operating Profit $ 550,000

Interest Expense 50,000

Extraordinary Loss. 200,000

Earnings Before Taxes$ 300,000

Income Taxes (33%). 100,000

Net Income.$ 200,000

. SAXTON COMPANY

Balance Sheet

As of December 31, 2009

Assets

Cash $ 30,000

Accounts Receivable.. 350,000

Marketable Securities .. 50,000

Inventory. 370,000

____________

Total Current Assets. $ 800,000

Net Plant and Equipment.. 800,000

____________

Total Assets.$ 1,600,000

Liabilities and Stockholders Equity

Accounts Payable..$ 50,000

Notes Payable.. 250,000

_____________

Total Current Liabilities..$ 300,000

Long Term Liabilities 300,000

____________

Total Liabilities ..$ 600,000

Common Stock. 400,000

Retained Earnings.. 600,000

____________

Total Stockholders Equity.$ 1,000,000

Total Liabilities and Stockholders Equity $ 1,600,000

1. The firm is looking to expand its operations by 10% of the firm's net property, plant, and equipment. (Calculate this amount by taking 10% of the property, plant, and equipment figure that appears on the firm's balance sheet.)
2. The estimated life of this new property, plant, and equipment will be 12 years. The salvage value of the equipment will be 5% of the property, plant and equipment's cost.
3. The annual EBIT for this new project will be 18% of the project's cost.
4. The company will use the straight-line method to depreciate this equipment. Also assume that there will be no increases in net working capital each year. Use 35% as the tax rate in this project.
5. The hurdle rate for this project will be the WACC that you are able to find on a financial website, such as Gurufocus.com. If you are unable to find the WACC for a company, contact your instructor.

WACC = 35.48% x 9.09% 67% + 64.52% x 20% = 2.16% + 12.90% = 15.06%

Using Net Income as perpetuity and WACC as discount rate,

Value of Saxton Company = Net Income / WACC = 200000 / 15.06% = $1328021.25

.

Prepare a narrated PowerPoint presentation that will highlight the following items.

• Your calculations for the amount of property, plant, and equipment and the annual depreciation for the project
• Your calculations that convert the project's EBIT to free cash flow for the 12 years of the project.
• The following capital budgeting results for the project
  • Net present value
  • Internal rate of return
  • Discounted payback period.
• Your discussion of the results that you calculated above, including a recommendation for acceptance or rejection of the project

Once again, you may embed your Excel spreadsheets into your document