The only real questions are numbers 2-7. The rest of the pictures are just the information to get those answers but I am not sure how to do it.

Step 1: Read the Full Case. On the "CapitalBudget" Worksheet: Step 2: Calculate the weights of Equity and Weights of Debt for the firm. Use the stock and bond data provided in the case. Step 3: Calculate the Cost of Equity for the firm. Use the CAPM and the Market data provided on on the Worksheet "MarketData". Step 4: Calculate the Cost of Debt for the firm. Use the information provided about the firms bonds to calculate the YTM. Step 5: Calculate the after-tax cost of debt. Use the given tax rate for the firm. Step 6: Use the results from steps 2-5 to calculate the WACC (Weighted Average Cost of Capital) for the firm. Step 7: Input the appropriate Initial Cash Outlays IMPORTANT: All cash inflows need to be POSITIVE and all cash outflows need to be NEGATIVE. Veronica Sarkozy, the CFO for the firm PSUWC Designer Jeans Company, LLC, woke up with a start at 4:00 am on 12/7/21, due to the phone ringing. It was the firms senior financial analyst, vacationing in Europe, calling with bad news. Veronica was supposed to present the project evaluation, at the end of the week, for the Board's proposal that they invest in new equipment which would enable them to add a new product line. Currently PSUWC has four successful products and they are considering selling a new Designer Jeans line. The staff of financial analysts had been working hard over the last few weeks collecting data and had prepared a model creating a financial forecast about the proposed project's viability. Disaster had struck on the night of 12/6/21 wherein malware all but wiped out the work of the analysts. Veronica needed to prepare a financial analysis of the project to present the Board with recommendations. All the staff had already left for their annual vacation and Veronica was working alone. Veronica quickly reached the office and managed to salvage what was left of the excel spreadsheet prepared for the presentation. What follows is some basic information that Veronica knew and was able to retrieve about the project. PSUWC's existing plant has excess capacity, in a fully depreciated building, to install and run the new equipment to produce the new Designer Jeans line. Due to relatively rapid advances in technology, the project was expected to be discontinued in four years. The new Designer Jeans was expected to sell for $ 105 per unit and had projected sales of 5800 units in the first year, with a projected (Most-Likely scenario) 18.0% growth rate per year for subsequent years. A total investment of $ 758,000 for new equipment was required. The equipment had fixed maintenance contracts of $ 303,074 per year with a salvage value of $ 145,621 and variable costs were 12% of revenues. Veronica also needed to consider both the Best-Case and Worst-Case scenarios in the analysis with growth rates of 28.00% and 1.80 % respectively. The new equipment would be depreciated to zero using straight line depreciation. The new project required an increase in working capital of $ 221,710 and $ 35,474 of this increase would be offset with accounts payable. PSUWC currently has 828000 shares of stock outstanding at a current price of $ 76.00. Even though the company has outstanding stock, it is not publicly traded and therefore there is no publicly available financial information. However, after analysis management believes that its equity beta is 0.88. semi-annually at a coupon rate of 5.00%. The bonds have a par value of $1,000 and will mature in 8 years. The average corporate tax rate was 31 % Management believes the S&P 500 is a reasonable proxy for the market portfolio. Therefore, the cost of equity is calculated using the company's equity beta and the market risk premium based on the S&P 500 annual expected rate of retum - Veronica would calculate the monthly expected market retum using 5 years of past monthly price data available in the worksheet Marketdata. This would then be multiplied by 12 to estimate the annual expected rate. Veronica remembered that if the expected rate of retum for the market was too low, too high, or negative, a forward looking rate of an historical average of about 9.5% would have to be used, as the calculated value for the current 5-year period may not be representative of the future. Veronica would consider a E(Rm) between 8-12% acceptable. Veronica would calculate the market risk premium: E(Rm) - Rf from the previous calculations using the risk-free rate data available in the worksheet Marketdata. Veronica noted that the risk-free rate was on an annual basis. Veronica needed to calculate the rate at which the project would have to be discounted to calculate the Net Present Value (NPV) of the proposed project based on the decision of raising capital and the current capital market environment. This discount rate, the WACC, would obviously influence the NPV and could affect the decision of whether to accept or reject the project. Thankfully, all the information needed to calculate this was available. Veronica needed to clearly show all the calculations and sources for all parameter estimates used in the calculation of the WACC (and ultimately the NPV). Gathering all the available in formation, Veronica got a large cup of extra strong coffee and sat down to work on the development of the Capital Budgeting project model. The correct recommendation to the board was critical to the future growth of the firm! Veronica appreciated the detailed step by step instructions on the Worksheet 0.Case Instructions - Luckily they S $1,000 I. Given the following data on proposed capital budgeting project. (Numerical Inputs Expected from you are highlighted in yellow and Formula/Function Inputs are highlighted in blue) Parameters Economic life of project in years. Market Value of Equity # of Shares Outstanding Price of New Equipment 221.710.00 Market Value of Debt # of Bonds Outstanding Change in NWC Total Market Value Market Price of Bonds $ 905.00 Fixed Costs Weight of Equity Market Price of Stock $ 76.00 Variable Costs (% of Revenue) Weight of Debt Salvage value of New Equipment E(R) o Marginal Tax Rate RE Bond Info Provided for your convenience 1 First Year Unit Sales 5800 B Years to Maturity 2 Sales Growth Rate 18.00% Cost of Equity (r.) PMT 3 Unit Sale Price $ 105.00 Cost of Debt (ra) FV 4 First Year Revenue After-Tax Cost of Debt Before tax YTM 5 WACC Before tax YTM* 2 6 Note Cells C21 and C22 include the initial (today's) cash flows. 7 Column D through G are the operating cash flows. 8 Spreadsheet for determining Cash Flows Cells G38-G40 contain the terminal cash flows. 9 Timeline: Year 0 3 4 o II. Net Investment Outlay = Initial CFS 1 Price of Equipment $ (221,710.00) 2 Change in NWC 3 III. Cash Flows from Operations 4 Revenue Generation 5 Unit Sales 5800 6 Unit Sale Price 105.00 7 Revenues 609.000.00 8 Costs 9 Variable Costs 0 Fixed Costs 1 Depreciation 2 Earnings Before Taxes 3 Taxes 4 Net Income 5 Depreciation 6 Net operating CFS 7 IV. Terminal Cash Flows 8 Salvage Value 9 Tax on Salvage Value 0 Return of NWC 1 V. Final Cash Flow 2 Cash Flows 3 Present Value of CFs 4 5 NPV of Project 6 7 Summarize Answers for NPV under three cases in area below 8 Sales Growth Rate NPV Accept? 9 Best Case 28.0% o Most Likely 18.00% 1 Worst Case 1.8% Company B = Risk Free Rate (Rt) = Returns 1 2 3 7 5 - 5 7 3 2 20 -1 -2 3 10000 2000 -4 5 -6 2 7 -8 9 . 20 1 . -2 -3 ... -4 . 5 15 26 27 . 28 19 30 * 1 12 3 34 35 36 7 . 18 39 10 * 11 12 13 14 - 15 16 17 18 19 50 51 2 53 64 5 c 66 67 co 58 co 9 an 60 51 52 63 54 S&P 500 Closing Data Date Adjusted Close 12/1/2021 6052.76 11/1/2021 6041.29 10/1/2021 5977.27 502727 9/1/2021 5843,03 59422 cocon 8/1/2021 5857.88 con 7/1/2021 5789.51 CA 6/1/2021 CU 5706.22 5/1/2021 5679.48 cena 4/1/2021 5539.30 3/1/2021 SASA 5454.59 caca 2/1/2021 5368.74 ca 1/1/2021 5318.45 cu 12/1/2020 5157.03 11/1/2020 5125.67 10/1/2020 5176.11 9/1/2020 5166.93 D2000 2000 8/1/2020 4990.94 200 7/1/2020 4937.96 CILOR 6/1/2020 4838.07 ... 5/1/2020 4753.22 4/1/2020 4603.27 VO 3/1/2020 4574.57 4522 2/1/2020 4572.36 1/1/2020 4610.74 12/1/2010 12/1/2019 4437.30 11/1/2019 4315.10 10/1/2019 4271.99 9/1/2019 4328.18 artin 8/1/2019 4304.17 2012 7/1/2019 4253.06 W 6/1/2019 4199.46 2012 5/1/2019 4271.58 W202 4/1/2019 4208.06 Win 3/1/2019 4149.55 2012 2/1/2019 4108.57 Win 1/1/2019 4076.71 15 12/1/2018 12112 4064.26 11/1/2018 3975.67 Who 10/1/2018 3946.90 9/1/2018 3967.60 8/1/2018 3919.14 7/1/2018 ro 3972.86 . 6/1/2018 3974.53 12 5/1/2018 3927.97 WA 4/1/2018 3805.66 ws 3/1/2018 3758.12 re wie 2/1/2018 3777.46 Vio 1/1/2018 3774.74 11 12/1/2017 *** 3756.98 11/1/2017 3725.41 Terra 10/1/2017 3724.89 9/1/2017 3732.98 8/1/2017 3675.68 acco 7/1/2017 2002 3599.36 12017 6/1/2017 3498.57 2017 5/1/2017 2010 3491.06 4/1/2017 2012 on 3517.89 3/1/2017 3517.38 2/1/2017 3453.57 1/1/2017 3459.57 12/1/2016 3370.00 Step 1: Read the Full Case. On the "CapitalBudget" Worksheet: Step 2: Calculate the weights of Equity and Weights of Debt for the firm. Use the stock and bond data provided in the case. Step 3: Calculate the Cost of Equity for the firm. Use the CAPM and the Market data provided on on the Worksheet "MarketData". Step 4: Calculate the Cost of Debt for the firm. Use the information provided about the firms bonds to calculate the YTM. Step 5: Calculate the after-tax cost of debt. Use the given tax rate for the firm. Step 6: Use the results from steps 2-5 to calculate the WACC (Weighted Average Cost of Capital) for the firm. Step 7: Input the appropriate Initial Cash Outlays IMPORTANT: All cash inflows need to be POSITIVE and all cash outflows need to be NEGATIVE. Veronica Sarkozy, the CFO for the firm PSUWC Designer Jeans Company, LLC, woke up with a start at 4:00 am on 12/7/21, due to the phone ringing. It was the firms senior financial analyst, vacationing in Europe, calling with bad news. Veronica was supposed to present the project evaluation, at the end of the week, for the Board's proposal that they invest in new equipment which would enable them to add a new product line. Currently PSUWC has four successful products and they are considering selling a new Designer Jeans line. The staff of financial analysts had been working hard over the last few weeks collecting data and had prepared a model creating a financial forecast about the proposed project's viability. Disaster had struck on the night of 12/6/21 wherein malware all but wiped out the work of the analysts. Veronica needed to prepare a financial analysis of the project to present the Board with recommendations. All the staff had already left for their annual vacation and Veronica was working alone. Veronica quickly reached the office and managed to salvage what was left of the excel spreadsheet prepared for the presentation. What follows is some basic information that Veronica knew and was able to retrieve about the project. PSUWC's existing plant has excess capacity, in a fully depreciated building, to install and run the new equipment to produce the new Designer Jeans line. Due to relatively rapid advances in technology, the project was expected to be discontinued in four years. The new Designer Jeans was expected to sell for $ 105 per unit and had projected sales of 5800 units in the first year, with a projected (Most-Likely scenario) 18.0% growth rate per year for subsequent years. A total investment of $ 758,000 for new equipment was required. The equipment had fixed maintenance contracts of $ 303,074 per year with a salvage value of $ 145,621 and variable costs were 12% of revenues. Veronica also needed to consider both the Best-Case and Worst-Case scenarios in the analysis with growth rates of 28.00% and 1.80 % respectively. The new equipment would be depreciated to zero using straight line depreciation. The new project required an increase in working capital of $ 221,710 and $ 35,474 of this increase would be offset with accounts payable. PSUWC currently has 828000 shares of stock outstanding at a current price of $ 76.00. Even though the company has outstanding stock, it is not publicly traded and therefore there is no publicly available financial information. However, after analysis management believes that its equity beta is 0.88. semi-annually at a coupon rate of 5.00%. The bonds have a par value of $1,000 and will mature in 8 years. The average corporate tax rate was 31 % Management believes the S&P 500 is a reasonable proxy for the market portfolio. Therefore, the cost of equity is calculated using the company's equity beta and the market risk premium based on the S&P 500 annual expected rate of retum - Veronica would calculate the monthly expected market retum using 5 years of past monthly price data available in the worksheet Marketdata. This would then be multiplied by 12 to estimate the annual expected rate. Veronica remembered that if the expected rate of retum for the market was too low, too high, or negative, a forward looking rate of an historical average of about 9.5% would have to be used, as the calculated value for the current 5-year period may not be representative of the future. Veronica would consider a E(Rm) between 8-12% acceptable. Veronica would calculate the market risk premium: E(Rm) - Rf from the previous calculations using the risk-free rate data available in the worksheet Marketdata. Veronica noted that the risk-free rate was on an annual basis. Veronica needed to calculate the rate at which the project would have to be discounted to calculate the Net Present Value (NPV) of the proposed project based on the decision of raising capital and the current capital market environment. This discount rate, the WACC, would obviously influence the NPV and could affect the decision of whether to accept or reject the project. Thankfully, all the information needed to calculate this was available. Veronica needed to clearly show all the calculations and sources for all parameter estimates used in the calculation of the WACC (and ultimately the NPV). Gathering all the available in formation, Veronica got a large cup of extra strong coffee and sat down to work on the development of the Capital Budgeting project model. The correct recommendation to the board was critical to the future growth of the firm! Veronica appreciated the detailed step by step instructions on the Worksheet 0.Case Instructions - Luckily they S $1,000 I. Given the following data on proposed capital budgeting project. (Numerical Inputs Expected from you are highlighted in yellow and Formula/Function Inputs are highlighted in blue) Parameters Economic life of project in years. Market Value of Equity # of Shares Outstanding Price of New Equipment 221.710.00 Market Value of Debt # of Bonds Outstanding Change in NWC Total Market Value Market Price of Bonds $ 905.00 Fixed Costs Weight of Equity Market Price of Stock $ 76.00 Variable Costs (% of Revenue) Weight of Debt Salvage value of New Equipment E(R) o Marginal Tax Rate RE Bond Info Provided for your convenience 1 First Year Unit Sales 5800 B Years to Maturity 2 Sales Growth Rate 18.00% Cost of Equity (r.) PMT 3 Unit Sale Price $ 105.00 Cost of Debt (ra) FV 4 First Year Revenue After-Tax Cost of Debt Before tax YTM 5 WACC Before tax YTM* 2 6 Note Cells C21 and C22 include the initial (today's) cash flows. 7 Column D through G are the operating cash flows. 8 Spreadsheet for determining Cash Flows Cells G38-G40 contain the terminal cash flows. 9 Timeline: Year 0 3 4 o II. Net Investment Outlay = Initial CFS 1 Price of Equipment $ (221,710.00) 2 Change in NWC 3 III. Cash Flows from Operations 4 Revenue Generation 5 Unit Sales 5800 6 Unit Sale Price 105.00 7 Revenues 609.000.00 8 Costs 9 Variable Costs 0 Fixed Costs 1 Depreciation 2 Earnings Before Taxes 3 Taxes 4 Net Income 5 Depreciation 6 Net operating CFS 7 IV. Terminal Cash Flows 8 Salvage Value 9 Tax on Salvage Value 0 Return of NWC 1 V. Final Cash Flow 2 Cash Flows 3 Present Value of CFs 4 5 NPV of Project 6 7 Summarize Answers for NPV under three cases in area below 8 Sales Growth Rate NPV Accept? 9 Best Case 28.0% o Most Likely 18.00% 1 Worst Case 1.8% Company B = Risk Free Rate (Rt) = Returns 1 2 3 7 5 - 5 7 3 2 20 -1 -2 3 10000 2000 -4 5 -6 2 7 -8 9 . 20 1 . -2 -3 ... -4 . 5 15 26 27 . 28 19 30 * 1 12 3 34 35 36 7 . 18 39 10 * 11 12 13 14 - 15 16 17 18 19 50 51 2 53 64 5 c 66 67 co 58 co 9 an 60 51 52 63 54 S&P 500 Closing Data Date Adjusted Close 12/1/2021 6052.76 11/1/2021 6041.29 10/1/2021 5977.27 502727 9/1/2021 5843,03 59422 cocon 8/1/2021 5857.88 con 7/1/2021 5789.51 CA 6/1/2021 CU 5706.22 5/1/2021 5679.48 cena 4/1/2021 5539.30 3/1/2021 SASA 5454.59 caca 2/1/2021 5368.74 ca 1/1/2021 5318.45 cu 12/1/2020 5157.03 11/1/2020 5125.67 10/1/2020 5176.11 9/1/2020 5166.93 D2000 2000 8/1/2020 4990.94 200 7/1/2020 4937.96 CILOR 6/1/2020 4838.07 ... 5/1/2020 4753.22 4/1/2020 4603.27 VO 3/1/2020 4574.57 4522 2/1/2020 4572.36 1/1/2020 4610.74 12/1/2010 12/1/2019 4437.30 11/1/2019 4315.10 10/1/2019 4271.99 9/1/2019 4328.18 artin 8/1/2019 4304.17 2012 7/1/2019 4253.06 W 6/1/2019 4199.46 2012 5/1/2019 4271.58 W202 4/1/2019 4208.06 Win 3/1/2019 4149.55 2012 2/1/2019 4108.57 Win 1/1/2019 4076.71 15 12/1/2018 12112 4064.26 11/1/2018 3975.67 Who 10/1/2018 3946.90 9/1/2018 3967.60 8/1/2018 3919.14 7/1/2018 ro 3972.86 . 6/1/2018 3974.53 12 5/1/2018 3927.97 WA 4/1/2018 3805.66 ws 3/1/2018 3758.12 re wie 2/1/2018 3777.46 Vio 1/1/2018 3774.74 11 12/1/2017 *** 3756.98 11/1/2017 3725.41 Terra 10/1/2017 3724.89 9/1/2017 3732.98 8/1/2017 3675.68 acco 7/1/2017 2002 3599.36 12017 6/1/2017 3498.57 2017 5/1/2017 2010 3491.06 4/1/2017 2012 on 3517.89 3/1/2017 3517.38 2/1/2017 3453.57 1/1/2017 3459.57 12/1/2016 3370.00