Table 4.1 Component Cost 31-Dec-2022 Effectvie Tax Rate 12.96% Yield to Maturity
Question:
Table 4.1 Component Cost 31-Dec-2022 | ||||
Effectvie Tax Rate | 12.96% | |||
Yield to Maturity | 3.43% | |||
Before Tax Component | 3.43% | |||
After Tax Componet | 0.03% | |||
Cost of Prefered Stock | 0 | |||
Table 4.2 CAPM Cost of Equity 31-Dec-2022 | ||||
beta | 0.82 | |||
Risk free Rate | 0.91% | |||
Market Rate premium | 6% | |||
Cost of Equity | 6.20% | |||
Table 4.3 Bond Yield Plus Risk Premium | ||||
Cost of Debt | 0.03% | |||
Risk Premium | 4% | |||
Cost of Equity | 4.03% | |||
Table 4.4 WACC Market Based Captial Structure | ||||
Effective Tax rate | 13.69% | |||
1-Effective Tax Rate | 86.31% | |||
Market Value Debt | $16,309 | |||
Market Value Prefered Stock | 0 | |||
Market Value Common Equity | $239,489 | |||
Market Weight Debt | 6.38% | |||
Market Weight Prefered Stock | 0 | |||
Market Weight Common Equity | 93.62% | |||
Cost of Debt | 0.03% | |||
Average cost of Equity | 6.20% | |||
WACC | 5.86% |
6) Capital Budgeting Analysis - Using the WACC obtained from in Step (4) as the discount rate for this project, apply capital budgeting analysis techniques (NPV, IRR, MIRR, PI, Payback, Discounted Payback) to analyze the new project. - Perform a sensitivity analysis for the effects of key variables (e.g., sales growth rate, cost of capital, unit costs, sales price) on the estimated NPV or IRR in order to demonstrate the sensitivity of the model. The Scenario analysis of several variables simultaneously is encouraged (but not required). A document Sensitivity Analysis using Data Table in Excel is provided for the introduction of the Data Table function in Excel. - Discuss whether the project should be taken and summarize your report.
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill