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Thank you for helping me with this question, please provide both the answer and it excel formula, as I also want to understand how to
Thank you for helping me with this question, please provide both the answer and it excel formula, as I also want to understand how to solve this as well. Thank you so much
Start with the partial model in the file Ch13 P18 Build a Model.xiss. Webmasters.com has developed a powerful new server that would be used for corporations' Internet activities. It would cost $11 million at Year 0 to buy the equipment necessary to manufacture the server. The project would require net working capital at the beginning of each year in an amount equal to 13% of the year's projected sales; for example, NWC0=13%(Sales1). The servers would sell for $27,500 per unit, and Webmasters believes that variable costs would amount to $20,000 per unit. After Year 1 , the sales price and variable costs will increase at the inflation rate of 4%. The company's nonvariable costs would be $1 million at Year 1 and would increase with inflation. The server project would have a life of 4 years. If the project is undertaken, it must be continued for the entire 4 years. Also, the project's returns are expected to be highly correlated with returns on the firm's other assets. The firm believes it could sell 900 units per year. The equipment would be depreciated over a 5 -year period, using MACRS rates. The estimated market value of the equipment at the end of the project's 4 -year life is $700,000. Webmasters.com's federal-plus-state tax rate is 25%. Its cost of capital is 12% for average-risk projects, defined as projects with a coefficient of variation of NPV between 0.8 at 1.2. Low-risk projects are evaluated with a 9% project cost of capital and high-risk projects at 14%. The data has been collected in the Microsoft Excel file below. Download the spreadsheet and perform the required analysis to answer the questions below. Do not round intermediate calculations. d. If the project appears to be more or less risky than an average project, finding its risk-adjusted NPV, IRR, and payback CV range of firm's average-risk project: Low-risk WACC WACC High-risk WACC Risk-adjusted WACC #N/A Risk-adjusted NPV #N/A Risk-adjusted IRR #N/A Risk-adjusted regular payback period (years) \#N/A d. If the project appears to be more or less risky than an average project, find its risk-adjusted NPV, IRR, and payback. Round your answer for the NPV to the nearest dollar and for the IRR and payback to two decimal places. Use a minus sign to enter a negative value, if any. Risk-adjusted NPV $ Risk-adjusted IRR % Risk-adjusted regular payback period years Start with the partial model in the file Ch13 P18 Build a Model.xiss. Webmasters.com has developed a powerful new server that would be used for corporations' Internet activities. It would cost $11 million at Year 0 to buy the equipment necessary to manufacture the server. The project would require net working capital at the beginning of each year in an amount equal to 13% of the year's projected sales; for example, NWC0=13%(Sales1). The servers would sell for $27,500 per unit, and Webmasters believes that variable costs would amount to $20,000 per unit. After Year 1 , the sales price and variable costs will increase at the inflation rate of 4%. The company's nonvariable costs would be $1 million at Year 1 and would increase with inflation. The server project would have a life of 4 years. If the project is undertaken, it must be continued for the entire 4 years. Also, the project's returns are expected to be highly correlated with returns on the firm's other assets. The firm believes it could sell 900 units per year. The equipment would be depreciated over a 5 -year period, using MACRS rates. The estimated market value of the equipment at the end of the project's 4 -year life is $700,000. Webmasters.com's federal-plus-state tax rate is 25%. Its cost of capital is 12% for average-risk projects, defined as projects with a coefficient of variation of NPV between 0.8 at 1.2. Low-risk projects are evaluated with a 9% project cost of capital and high-risk projects at 14%. The data has been collected in the Microsoft Excel file below. Download the spreadsheet and perform the required analysis to answer the questions below. Do not round intermediate calculations. d. If the project appears to be more or less risky than an average project, finding its risk-adjusted NPV, IRR, and payback CV range of firm's average-risk project: Low-risk WACC WACC High-risk WACC Risk-adjusted WACC #N/A Risk-adjusted NPV #N/A Risk-adjusted IRR #N/A Risk-adjusted regular payback period (years) \#N/A d. If the project appears to be more or less risky than an average project, find its risk-adjusted NPV, IRR, and payback. Round your answer for the NPV to the nearest dollar and for the IRR and payback to two decimal places. Use a minus sign to enter a negative value, if any. Risk-adjusted NPV $ Risk-adjusted IRR % Risk-adjusted regular payback period yearsStep by Step Solution
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