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Show work on EXCEL, please! I will give a thumbs up if answer is correct and work and equations are shown. Thank you! i =
Show work on EXCEL, please! I will give a thumbs up if answer is correct and work and equations are shown. Thank you!
i = rdebt = 10% OCFO = -$100,000 Ku = rassets = 15% OCF1-4 = $39,800 = 25,000 ~ ($5 $3) * (1 - 0.34) + $20,000 ~ 0.34 Ky = requity = 24.9% OCF5 = $43,100 = $39,800 + $5,000 x (1 0.34) K = WWACC = 11.20% Tax rate = 34% Debt-to-equity ratio = 3 Risk-free rate = 2% The 5-year project requires equipment that costs $100,000. If undertaken, the shareholders will contribute $25,000 cash and borrow $75,000 with an interest-only loan with a maturity of 5 years and annual interest payments. The equipment will be depreciated straight-line to zero over the 5-year life of the project. There will be a pre-tax salvage value of $5,000. There are no other start-up costs at year 0. During years 1 through 5, the firm will sell 25,000 units of product at $5; variable costs are $3; there are no fixed costs. What is the NPV of the project using the WACC methodology
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