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please show working out and formulas so i understand. Food and Health Company is expanding and has an average-risk project under consideration. The company decides
please show working out and formulas so i understand.
Food and Health Company is expanding and has an average-risk project under consideration. The company decides to fund the project in the same manner as the company's existing capital structure. The cost of debt is 9.00%, the cost of preferred stock is 12.00%, the cost of common stock is 16.00%, and the WACC adjusted for taxes is 11.50%. The estimation for the incremental cash flows for this project are presented below. Incremental cash flows: Category T1 T2 T3 Investment $2,500,000 $250,000 NWC Operating Cash Flow Salvage $750,000 $750,000 $250,000 $750,000 $50,000 a) Given the expected incremental cash flows provided in this question what is the net present value (NPV) of this project? Show all steps, workings, and formula(s) clearly. b) According to the NPV decision making rule, should this project be accepted? Why or why not? [Word limit: 30 words (answers beyond word limit will not be marked).] Click here to enter text. c) If the internal rate of return (IRR) of the project is estimated to be 11%, according to the IRR decision making rule, should this project be accepted? Why or why not? Click here to enter text Step by Step Solution
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