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Question As a member of the finance team at your firm, you are tasked with analysing the sales forecast and its implications on the financial
Question
As a member of the finance team at your firm, you are tasked with analysing the sales forecast
and its implications on the financial performance and capital structure of the company. The
sales forecast has been made with probabilities assigned to different levels of sales, as outlined
in the table below:
Additional information about the firm's financial situation is provided:
Fixed costs: R
Variable cost is of salesNumber of outstanding shares of common stock:
Tax rate:
Riskfree rate:
Market return:
Firm beta:
Price per share: R
Required:
i calculate the EBIT levels of each sales level
ii calculate the EPS of each sales level
iii calculate the expected EPS
iv calculate the cost of capital of common stock and debts
v Calculate the WACC of your firm
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