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Home Insert Draw Formulas Data Review View ADS 17 S This account does not allow editing on your device. For an account with full access, contact your organisation about your subscription plan fx The Frank Stone Company is considering the introduction of a new product. Generally, the company's products have a life of about 5 years, after which they are deleted from Sign in Question 2 (4 marks The Frank Stone Company is considering the introduction of a new product. Generally, the company's products have a life of about 5 years, after which they are deleted from the range of products that the company sels. The new product requires the purchase of new opment conting $4,000,000, including freight and installation charges. The useful life of the coupment is 5 years, with an estimated resale of equipment of $1.575.000 at the end of that period. The equipment will be fully depreciation to Pero value using the straight line forme cost method. The new product will be manufactured in a factory already owned by the company. This factory is currently being rented to another company under a lease agreement that has 5 years to run and provides for an annual rental of 5150,000. Under the lease greement, the Frank Store Company can cancel the lease by immediately rear paying the bese compensation equal to 1 year's rental payment It is expected that the product will involve the company in sales promotion expenditures that will amount to $500,000 during the first year the product is on the market. Additions to current assets (net working capital will require $225.000 at the commencement of the project and are assumed to be fully recoverable at the end of the fifth yea. The new product is expected to generate sales revenue as follow Year 153,000,000 Year 2: $3,500,000 Year: 51.250,000 Year 4:53,000,000 Year 5:51.500.000 Rimed that all cash flows are received at the end of each year. The corporate tax rate 18% frank Stone Company has an equity beta of 0.5 ts capital structure commits of equal amounts of equity and debt. The risk free rate . The debt has a preta yield of 10% and the expected rate of return on the market inde lista Using the inputsuggested in the proposed investment, design an tace financial model that can help toute the project. The model should enable Frank Store Company to consider the project and forecast the net cash flows marks will be located for negretion and clarity of your modele. If there are clear heading.der aangement for input dels propriate le of colors, have some degree of flexibiliteerste warning nenges for wrong er route Answer the following cuestions using your Excel financial model 15 mars What is Frank Store Company's weighted werage cost of capital (WACCI? mark Estimate the free cash flows of the project What is the net presente PV) and internal rate of return of the project? Shoul Frank Store Company undertake the project based on NPV? How about? Do both NPV and I lead to the same dechos 4.1 Dwa line graph to explain the writivity of the eV to changes in WACC The graph should have a charit, as well as adyanis labels Cover Page Q1 25marks 02 40marks 03 35marks Home Insert Draw Formulas Data Review View ADS 17 S This account does not allow editing on your device. For an account with full access, contact your organisation about your subscription plan fx The Frank Stone Company is considering the introduction of a new product. Generally, the company's products have a life of about 5 years, after which they are deleted from Sign in Question 2 (4 marks The Frank Stone Company is considering the introduction of a new product. Generally, the company's products have a life of about 5 years, after which they are deleted from the range of products that the company sels. The new product requires the purchase of new opment conting $4,000,000, including freight and installation charges. The useful life of the coupment is 5 years, with an estimated resale of equipment of $1.575.000 at the end of that period. The equipment will be fully depreciation to Pero value using the straight line forme cost method. The new product will be manufactured in a factory already owned by the company. This factory is currently being rented to another company under a lease agreement that has 5 years to run and provides for an annual rental of 5150,000. Under the lease greement, the Frank Store Company can cancel the lease by immediately rear paying the bese compensation equal to 1 year's rental payment It is expected that the product will involve the company in sales promotion expenditures that will amount to $500,000 during the first year the product is on the market. Additions to current assets (net working capital will require $225.000 at the commencement of the project and are assumed to be fully recoverable at the end of the fifth yea. The new product is expected to generate sales revenue as follow Year 153,000,000 Year 2: $3,500,000 Year: 51.250,000 Year 4:53,000,000 Year 5:51.500.000 Rimed that all cash flows are received at the end of each year. The corporate tax rate 18% frank Stone Company has an equity beta of 0.5 ts capital structure commits of equal amounts of equity and debt. The risk free rate . The debt has a preta yield of 10% and the expected rate of return on the market inde lista Using the inputsuggested in the proposed investment, design an tace financial model that can help toute the project. The model should enable Frank Store Company to consider the project and forecast the net cash flows marks will be located for negretion and clarity of your modele. If there are clear heading.der aangement for input dels propriate le of colors, have some degree of flexibiliteerste warning nenges for wrong er route Answer the following cuestions using your Excel financial model 15 mars What is Frank Store Company's weighted werage cost of capital (WACCI? mark Estimate the free cash flows of the project What is the net presente PV) and internal rate of return of the project? Shoul Frank Store Company undertake the project based on NPV? How about? Do both NPV and I lead to the same dechos 4.1 Dwa line graph to explain the writivity of the eV to changes in WACC The graph should have a charit, as well as adyanis labels Cover Page Q1 25marks 02 40marks 03 35marks