The company's CEO is looking to expand its operations by investing in new property, plant, and equipment. You are asked to do some capital budgeting analysis that will determine

whether the company should invest in these new plant assets.

The firm is looking to expand its operations by 10% of the firm's net property, plant, and equipment. (Calculate this amount by taking 10% of the property, plant, and equipment figure that appears on the firm's balance sheet.) The estimated life of this new property, plant, and equipment will be 12 years. The salvage value of the equipment will be 5% of the property, plant and equipment's cost. The annual EBIT for this new project will be 18% of the project's cost. The company will use the straight-line method to depreciate this equipment. Also assume that there will be no increases in net working capital each year. Use 35% as the tax rate in this project. The WACC. (4.96%)

highlight the following items.

• calculations for the amount of property, plant, and equipment and the annual depreciation for the project
• calculations that convert the project's EBIT to free cash flow for the 12 years of the project.
• The following capital budgeting results for the project
  • 1.Net present value
  • 2.Internal rate of return
  • 3. Discounted payback period
• including a recommendation for acceptance or rejection of the project

2020 2019 $ ASSETS Current Assets Cash and cash equivalents Short-term investments Accounts and notes receivable, net Inventories Prepaid expenses and other current assets Total Current Assets Property, Plant and Equipment, net Amortizable Intangible Assets, net Goodwill Other Indefinite-Lived Intangible Assets Investments in Noncontrolled Affiliates Deferred Income Taxes Other Assets Total Assets 8,185 1,366 8,404 4,172 874 23,001 21,369 1,703 18,757 17,612 2,792 4,372 3,312 92,918 5,509 229 7,822 3,338 747 17,645 19,305 1,433 15,501 14,610 2,683 4,359 3,011 78,547 $ $ 3,780 19,592 23,372 40,370 4,284 11,340 79,366 2,920 17,541 20,461 29,148 4,091 9,979 63,679 LIABILITIES AND EQUITY Current Liabilities Short-term debt obligations Accounts payable and other current liabilities Total Current Liabilities Long-Term Debt Obligations Deferred Income Taxes Other Liabilities Total Liabilities Commitments and contingencies PepsiCo Common Shareholders' Equity Common stock, par value 1/4 per share (authorized 3,600 shares; issued, net of repurchased common stock at par value: 1,380 and 1,391 shares, respectively) Capital in excess of par value Retained earnings Accumulated other comprehensive loss Repurchased common stock, in excess of par value (487 and 476 shares, respectively) Total PepsiCo Common Shareholders' Equity Noncontrolling interests Total Equity Total Liabilities and Equity 23 3,910 63,443 (15,476) (38,446) 13,454 98 13,552 92,918 23 3,886 61,946 (14,300) (36,769) 14,786 82 14,868 78,547 $ $ 2020 2019 $ ASSETS Current Assets Cash and cash equivalents Short-term investments Accounts and notes receivable, net Inventories Prepaid expenses and other current assets Total Current Assets Property, Plant and Equipment, net Amortizable Intangible Assets, net Goodwill Other Indefinite-Lived Intangible Assets Investments in Noncontrolled Affiliates Deferred Income Taxes Other Assets Total Assets 8,185 1,366 8,404 4,172 874 23,001 21,369 1,703 18,757 17,612 2,792 4,372 3,312 92,918 5,509 229 7,822 3,338 747 17,645 19,305 1,433 15,501 14,610 2,683 4,359 3,011 78,547 $ $ 3,780 19,592 23,372 40,370 4,284 11,340 79,366 2,920 17,541 20,461 29,148 4,091 9,979 63,679 LIABILITIES AND EQUITY Current Liabilities Short-term debt obligations Accounts payable and other current liabilities Total Current Liabilities Long-Term Debt Obligations Deferred Income Taxes Other Liabilities Total Liabilities Commitments and contingencies PepsiCo Common Shareholders' Equity Common stock, par value 1/4 per share (authorized 3,600 shares; issued, net of repurchased common stock at par value: 1,380 and 1,391 shares, respectively) Capital in excess of par value Retained earnings Accumulated other comprehensive loss Repurchased common stock, in excess of par value (487 and 476 shares, respectively) Total PepsiCo Common Shareholders' Equity Noncontrolling interests Total Equity Total Liabilities and Equity 23 3,910 63,443 (15,476) (38,446) 13,454 98 13,552 92,918 23 3,886 61,946 (14,300) (36,769) 14,786 82 14,868 78,547 $ $