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SECTION 1 : Answer all questions in this section. Question 1 Salyssa Inc is a Caribbean company which operates 2 divisions: Cold Storage and Meat
SECTION : Answer all questions in this section. Question Salyssa Inc is a Caribbean company which operates divisions: Cold Storage and Meat Processing. The company is extremely profitable, and is considering a number of new projects as part of its planned expansion. Cold Storage The Cold Storage division specializes in breakfast foods and other frozen goods. They are about to embark on the building of a facility that would maintain the freshness of goods for a longer period of time. Meat Processing Meat Processing deals with transforming raw meats into processed products such as burgers and sausages. The company plans to implement a processing machine that enables a quicker transformation from raw meat to processed goods. Table : Divisional and Consolidated information Effective Business Segment DebtEquity ratio Spread to Treasury tax rate Consolidated Cold Storage Identifiable Assets millions $ Meat Processing $ Table : Industry information Beta Industry DebtValue ratio Cold Storage Meat Processing Table : Treasury information Maturity Rate Year Year Year Table : Market returns S&P index Years Average S&P retums to to Required: a Calculate the WACC for each division, and for the consolidated company. The statutory tax rate is b Compare and contrast the two methods of dealing with flotation costs, stating the advantages and disadvantages of each one. Use examples where necessary.
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