please help with questions 1- 5. if the information in table 1- 3 are not correct please help as well. Also please below the tables from project 4. Thanks for your help.

can you please tell me what info you need. I attached the answers from project 4. Thanks

Details of McCormick Plant Proposal As you know from Project 4, McCormick & Company is considering a project that requires an initial investment of $350 million to build a new plant and purchase equipment. The investment will be depreciated as a modified accelerated cost recovery system (MACRS) seven-year class asset. The new plant will be built on some of the company's land, which has a current, after-tax market value of $14 million. You have been asked to refine your work to include the correct tax impact of depreciation, and the cash flow impact of working capital on the capital budget evaluation. The investment will be depreciated as a modified accelerated cost recovery system (MACRS) seven-year class asset. The correct depreciation table is included at the right. Year 16 | The company will need to finance some of the cash to fund $17 million in receivables and $14 million in Inventory starting at year zero. The company expects vendors to give free credit on purchases of $15 million (accounts 18 Payable). Add the net cash outflow for working capital to the cash outflow for the plant, equipment and land in 19 year zero. The $17 million for receivables and the $14 million for Inventory are cash outflows. The $15 million for 20 receivables is a cash inflow. Assume that this net working capital is recovered as a cash inflow in year 21. ANNO The company still estimates revenues and expenses the same as it did in Project 4. See Table 2 at the right. Instructions Cost of Capital Capital Budgeting Questions: 1. What will be the tax depreciation each year? Note: the total deprecation of tax purposes will still be $350 29 million if your calculations are correct. 2. Create an after-tax cash flow timeline similar to the one you did in Project 4. 3. Calculate the new NPV and IRR. Should the Project be accepted? The CFO thinks that the likely NPV and IRR will be close to the numbers that you calculated in Project 4. NPV = ($349,999,992.34) No the project should not be accepted. The following questions will be used to estimate risk. Please use Table 3 to calculate cash flow. 4. The controller is worried about tax increases and estimates that the tax rate with be raised to 50% (federal and Maryland state) in year 4. Also there is a concern that expenses are understated. He asks, "What would happen to the NPV calculation if the cash tax expenses come in 2% higher than estimated and the tax rate increases to 50% in year 4?" This will allow a subjective evaluation of the project risk. Calculate a new cash flow time line with cash expenses 10% higher than those in Table 2 and with a 50% tax rate. Use Table 3 41 5. What would be the net present value, NPV in this "worst case" cash flow? What will be the IRR? Table 1 MACRS Depreciation Year 7 Year class 1 14.29% 24.49% 3 17.49% 4 12.49% 5 8 .93% 6 8 .92% 8.93% 4.46% $350 Depreciation $50.02 $85.72 $61.22 $43.72 $31.26 $31.22 $31.26 $15.61 Table 2 15 Year Cash from Cash outflow, Taxable Revenue in e xpenses in Depreciation in Income in $ Tax in Millions After tax Cash Flow In SMillions SMillions SMillions Millions 27.5+ rate SMillions $1,800 $1,728 $50.02 $21.99 $6.05 $65.95 $1,900 $1,824 $85.72 -$9.72 -$2.67 $78.67 $2,000 $1,920 $61.22 $18.79 $5.17 $74.83 $2,100 $2,016 $43.72 $40.29 $11.08 $72.92 $2,200 $2,112 $31.26 $56.75 $15.60 $72.40 $2,300 $2,208 $31.22 $60.78 $16.71 $75.29 $2.400 $2.304 $64.751 $17.80 $78.201 Instructions Cost of Capital Capital Budgeting $31.261 M N 5 $31.26 $15.61 www $2,400 $2,500 $2,600 $2,700 $2,600 $2,500 $2,400 $2,200 $2,000 $1,800 $1,500 $1,200 0 $2,304 $2,400 $2,496 $2,592 $2,496 $2,400 $2,304 $2,112 $1,920 $1,728 $1,440 $1,152 $768 $384 Table 3 $64.75 $84.39 $104.00 $108.00 $104.00 $100.00 $96.00 $88.00 $80.00 $72.00 $60.00 $48.00 $32.00 $16.00 $17.80 $23.21 $28.60 $29.70 $28.60 $27.50 $26.40 $24.20 $22.00 $19.80 $16.50 $13.20 $8.80 $4.40 $78.20 $76.79 $75.40 $78.30 $75.40 $72.50 $69.60 $63.80 $58.00 $52.20 $43.50 $34.80 $23.20 $27.60 $800 $400 Taxth $Millions Cash from Cash outflow, Taxable 27.5% rate in Revenue in expenses in Depreciation in Income in s years 1, 2, 3 and After tax Cash Flow In SMillions SMillions SMillions Millions 50% there after SMillions $1,800 $1,762.56 $50.02 -$12.57 $3.46 $40.90 $1,900 $1,860.48 $85.72 -$46.20 -$12.70 $52.22 $2,000 $1,958.40 $61.22 $19.62 $5.40 $47.00 $2.1001 $2.056.32 $43.72 -S0.041 -$0.021 $43.70 Instructions Cost of Capital Capital Budgeting 40 HIS $43.72 $31.26 $31.22 $31.26 $15.61 $0.00 $0.00 $0.00 SS SS SS #BeBe MINI $2,100 $2,056.32 $2,200 $2,154.24 $2,300 $2,252.16 $2,400 $2,350.08 $2,500 $2,448.00 $2,600 $2,545.92 $2,700 $2,643.84 $2,600 $2,545.92 $2,500 $2,448.00 $2,400 $2,350.08 $2,200 $2,154.24 $2,000 $1,958.40 $1,800 $1,762.56 $1,500 $1,468.80 $1,200 $1,175.04 $800 $783.36 $400 $391.68 $0.04 $14.50 $16.62 $18.67 $36.39 $54.08 $56.16 $54.08 $52.00 $49.92 $45.76 $41.60 $37.44 $31.20 $24.96 $16.64 $8.32 $0.02 $7.25 $8.31 $9.33 $18.20 $27.04 $28.08 $27.04 $26.00 $24.96 $22.88 $20.80 $18.72 $15.60 $12.48 $8.32 $4.16 $43.70 $38.51 $39.53 $40.59 $33.80 $27.04 $28.08 $27.04 $26.00 $24.96 $22.88 $20.80 $18.72 $15.60 $12.48 $8.32 $4.16 + 016 4424000 - X for Lo N IN PMT PV $4,424,000 FV ($13,740,272.47) 10 12% PMT FV PV $ 4,424,000.00 12% ($13,740,272.47) Principal Percent Down Amount Financed 30% $ 3,096,800.00 I/ 00 PESSOAS Loan Loan A Loan B Loan C PV 6% $ 3,096,800.00 4.5% $ 3,096,800.00 5% $ 3,096,800.00 PMT ($269,993.14) ($391,369.94) ($298,352.80) PV Loan Loan A Loan B Loan C 6% 4.5% 5% $3,096,800 $3,096,800 $3,096,800 PMT $269,993.14 $391,369.94 $298,352.80 Total Paid $5,400,000.00 $3,913,699.35 $4,475,291.94 6 Loan B R = Rp + B X (RM - Rp) Expected return = 5.63 risk free rate= 2.03 Beta 0.6 expected market return risk free rate R. 8.03 2.03 2 cost of equity= expected dividend= 2.28 current stock price= 155.7 constant growth rate= 0.087 Instructions Financing and Investing 0.101644 or 10.16% Annuities Corporate Valuation Details of McCormick Plant Proposal As you know from Project 4, McCormick & Company is considering a project that requires an initial investment of $350 million to build a new plant and purchase equipment. The investment will be depreciated as a modified accelerated cost recovery system (MACRS) seven-year class asset. The new plant will be built on some of the company's land, which has a current, after-tax market value of $14 million. You have been asked to refine your work to include the correct tax impact of depreciation, and the cash flow impact of working capital on the capital budget evaluation. The investment will be depreciated as a modified accelerated cost recovery system (MACRS) seven-year class asset. The correct depreciation table is included at the right. Year 16 | The company will need to finance some of the cash to fund $17 million in receivables and $14 million in Inventory starting at year zero. The company expects vendors to give free credit on purchases of $15 million (accounts 18 Payable). Add the net cash outflow for working capital to the cash outflow for the plant, equipment and land in 19 year zero. The $17 million for receivables and the $14 million for Inventory are cash outflows. The $15 million for 20 receivables is a cash inflow. Assume that this net working capital is recovered as a cash inflow in year 21. ANNO The company still estimates revenues and expenses the same as it did in Project 4. See Table 2 at the right. Instructions Cost of Capital Capital Budgeting Questions: 1. What will be the tax depreciation each year? Note: the total deprecation of tax purposes will still be $350 29 million if your calculations are correct. 2. Create an after-tax cash flow timeline similar to the one you did in Project 4. 3. Calculate the new NPV and IRR. Should the Project be accepted? The CFO thinks that the likely NPV and IRR will be close to the numbers that you calculated in Project 4. NPV = ($349,999,992.34) No the project should not be accepted. The following questions will be used to estimate risk. Please use Table 3 to calculate cash flow. 4. The controller is worried about tax increases and estimates that the tax rate with be raised to 50% (federal and Maryland state) in year 4. Also there is a concern that expenses are understated. He asks, "What would happen to the NPV calculation if the cash tax expenses come in 2% higher than estimated and the tax rate increases to 50% in year 4?" This will allow a subjective evaluation of the project risk. Calculate a new cash flow time line with cash expenses 10% higher than those in Table 2 and with a 50% tax rate. Use Table 3 41 5. What would be the net present value, NPV in this "worst case" cash flow? What will be the IRR? Table 1 MACRS Depreciation Year 7 Year class 1 14.29% 24.49% 3 17.49% 4 12.49% 5 8 .93% 6 8 .92% 8.93% 4.46% $350 Depreciation $50.02 $85.72 $61.22 $43.72 $31.26 $31.22 $31.26 $15.61 Table 2 15 Year Cash from Cash outflow, Taxable Revenue in e xpenses in Depreciation in Income in $ Tax in Millions After tax Cash Flow In SMillions SMillions SMillions Millions 27.5+ rate SMillions $1,800 $1,728 $50.02 $21.99 $6.05 $65.95 $1,900 $1,824 $85.72 -$9.72 -$2.67 $78.67 $2,000 $1,920 $61.22 $18.79 $5.17 $74.83 $2,100 $2,016 $43.72 $40.29 $11.08 $72.92 $2,200 $2,112 $31.26 $56.75 $15.60 $72.40 $2,300 $2,208 $31.22 $60.78 $16.71 $75.29 $2.400 $2.304 $64.751 $17.80 $78.201 Instructions Cost of Capital Capital Budgeting $31.261 M N 5 $31.26 $15.61 www $2,400 $2,500 $2,600 $2,700 $2,600 $2,500 $2,400 $2,200 $2,000 $1,800 $1,500 $1,200 0 $2,304 $2,400 $2,496 $2,592 $2,496 $2,400 $2,304 $2,112 $1,920 $1,728 $1,440 $1,152 $768 $384 Table 3 $64.75 $84.39 $104.00 $108.00 $104.00 $100.00 $96.00 $88.00 $80.00 $72.00 $60.00 $48.00 $32.00 $16.00 $17.80 $23.21 $28.60 $29.70 $28.60 $27.50 $26.40 $24.20 $22.00 $19.80 $16.50 $13.20 $8.80 $4.40 $78.20 $76.79 $75.40 $78.30 $75.40 $72.50 $69.60 $63.80 $58.00 $52.20 $43.50 $34.80 $23.20 $27.60 $800 $400 Taxth $Millions Cash from Cash outflow, Taxable 27.5% rate in Revenue in expenses in Depreciation in Income in s years 1, 2, 3 and After tax Cash Flow In SMillions SMillions SMillions Millions 50% there after SMillions $1,800 $1,762.56 $50.02 -$12.57 $3.46 $40.90 $1,900 $1,860.48 $85.72 -$46.20 -$12.70 $52.22 $2,000 $1,958.40 $61.22 $19.62 $5.40 $47.00 $2.1001 $2.056.32 $43.72 -S0.041 -$0.021 $43.70 Instructions Cost of Capital Capital Budgeting 40 HIS $43.72 $31.26 $31.22 $31.26 $15.61 $0.00 $0.00 $0.00 SS SS SS #BeBe MINI $2,100 $2,056.32 $2,200 $2,154.24 $2,300 $2,252.16 $2,400 $2,350.08 $2,500 $2,448.00 $2,600 $2,545.92 $2,700 $2,643.84 $2,600 $2,545.92 $2,500 $2,448.00 $2,400 $2,350.08 $2,200 $2,154.24 $2,000 $1,958.40 $1,800 $1,762.56 $1,500 $1,468.80 $1,200 $1,175.04 $800 $783.36 $400 $391.68 $0.04 $14.50 $16.62 $18.67 $36.39 $54.08 $56.16 $54.08 $52.00 $49.92 $45.76 $41.60 $37.44 $31.20 $24.96 $16.64 $8.32 $0.02 $7.25 $8.31 $9.33 $18.20 $27.04 $28.08 $27.04 $26.00 $24.96 $22.88 $20.80 $18.72 $15.60 $12.48 $8.32 $4.16 $43.70 $38.51 $39.53 $40.59 $33.80 $27.04 $28.08 $27.04 $26.00 $24.96 $22.88 $20.80 $18.72 $15.60 $12.48 $8.32 $4.16 + 016 4424000 - X for Lo N IN PMT PV $4,424,000 FV ($13,740,272.47) 10 12% PMT FV PV $ 4,424,000.00 12% ($13,740,272.47) Principal Percent Down Amount Financed 30% $ 3,096,800.00 I/ 00 PESSOAS Loan Loan A Loan B Loan C PV 6% $ 3,096,800.00 4.5% $ 3,096,800.00 5% $ 3,096,800.00 PMT ($269,993.14) ($391,369.94) ($298,352.80) PV Loan Loan A Loan B Loan C 6% 4.5% 5% $3,096,800 $3,096,800 $3,096,800 PMT $269,993.14 $391,369.94 $298,352.80 Total Paid $5,400,000.00 $3,913,699.35 $4,475,291.94 6 Loan B R = Rp + B X (RM - Rp) Expected return = 5.63 risk free rate= 2.03 Beta 0.6 expected market return risk free rate R. 8.03 2.03 2 cost of equity= expected dividend= 2.28 current stock price= 155.7 constant growth rate= 0.087 Instructions Financing and Investing 0.101644 or 10.16% Annuities Corporate Valuation