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Please, help with this engineering economics question. Mechatronic Systems Inc. (MSI) is a (hypothetical) high--tech consumer products firm located in Surrey, British Columbia. The firm

Please, help with this engineering economics question.
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Mechatronic Systems Inc. (MSI) is a (hypothetical) high--tech consumer products firm located in Surrey, British Columbia. The firm was started with seed money from angel investors, followed by a round of venture capital funding and subsequently an initial public offering (IPO) through which MSI became a listed public company. A recent set of financial statements for MSI is presented in the appendix, along with a history of share prices and dividends paid since the company went public MSI prides itself on a rapid product development and launch cycle, having taken 8 major new products to market in the past 5 years. A summary of product launch data is provided in the appendix, including projected market share (based on pre-launch consumer research), actual market share (based on market statistics), projected gross marein and actual gross margin. MSI is planning to launch another new product in the emerging market of kinetic energy harvesting, and needs to estimate the impact that a successful launch is likely to have on the company's share price. The market that MSI is targeting has an estimated size (revenues) of $42M annually. Based on consumer research, MSI believes that it can capture 16% of this market in the first year, with a sales growth rate of 10% (year over year) for the following 5 years (due to a combination of increased market share and increased market size). After this point it is assumed that sales will stabilize. Gross margin for the product is estimated at 38% in year 1, rising to 45% over the following two years with increases in efficiency. In order to make the product ready for manufacture and sale, MSI needs to invest $200,000 in a short term (6 month) R&D initiative (SR&ED eligible at a rate of 25%), with all work being carried out at its facility in BC. A new manufacturing facility will be required to produce the new product. Installation and commissioning of the manufacturing line will include $3.4M in equipment, and $420,000 in labour. The CCA rate for the manufacturing line is 30%. In order to support the new product, it is estimated that MSI's SG&A expenses will increase by 11% after launch. Part a: What is MSI's Tax Rate? Part b: If MSI were to finance the project using 100% equity (assume no new stock is issued for this part), what would be an appropriate MARR to use in evaluating the project? Part c: If MSI were to finance the project using 100% debt, what would be an appropriate MARR to use in evaluating the project? Part d: What is MSI's Weighted Average Cost of Capital (WACC)? Part e: For each of the following scenarios, estimate the impact of the project on MSi's stock price (including an analysis and discussion of risk) You may assume that the market value of a firm is established by investors as Scenario A: 100% equity financing (raised through issuing new common stock with 10% flotation cost) Scenario B: 100% debt financing (5 year loan with equal annual payments and interest equal to MSI's current cost of debt). Scenario C: Mixed financing with objective of maintaining MSI's debt ratio

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