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Sports EX Inc. is a Sports Shoes Company which is considering investing in a new equipment for the production of a new line of Tennis
Sports EX Inc. is a Sports Shoes Company which is considering investing in a new equipment for the production of a new line of Tennis and Football Shoes for its elite customers. The new equipment will cost $ and an additional $ is needed for installation. The equipment which falls into the MACRS yr class, would be sold after three years for $ The equipment will generate additional annual revenues of $ and will have annual operating expenses of $ An inventory investment of $ is required during the life of the project. Sports EX is in the percent tax bracket, and has the same risk as the firms existing assets. The capital required for the project has been arranged as follows: Debt: year, semiannual coupon bonds with a par value of $ each selling for of its face value Estimate the projects IRR Common stock: shares selling for $ each with a beta of The markets rate of return is and riskfree investments offer a return.Compute the projects NPV
Sports EX Inc. is a Sports Shoes Company which is considering investing
in a new equipment for the production of a new line of Tennis and
Football Shoes for its elite customers. The new equipment will cost
$ and an additional $ is needed for installation. The
equipment which falls into the MACRS yr class, would be sold after
three years for $
The equipment will generate additional annual revenues of $
and will have annual operating expenses of $ An inventory
investment of $ is required during the life of the project.
Sports EX is in the percent tax bracket, and has the same risk as
the firms existing assets.
The capital required for the project has been arranged as follows:
Debt: year, semiannual coupon bonds with a par value of
$ each selling for of its face value Estimate the projects IRR
Common stock: shares selling for $ each with a beta of
The markets rate of return is and riskfree investments offer a
return.Compute the projects NPV
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