The Phillips Company is considering increasing its headphone production capacity to fulfill a large private contract. The CFO has tasked her finance staff to analyze the project and make a recommendation to the executive team to be included at next months board meeting. The CFO provides the following information to the analyst: COST OF CAPITAL Phillips current capital structure is comprised of $200,000,000 in debt, $100,000,000 in preferred equity, and $500,000,000 in common equity. Phillips currently has issued bonds that mature in 10 years with a coupon rate of 6% and a current market price of $1,255. Preferred shares of Phillips are trading at $45/share and pay an annual dividend of $2.05/share. Common stock of Phillips has a beta of 1.4 and trades at $32/share. The 10-year US treasury yield is 3.5%. The market risk premium is estimated at 6.5%. Their tax rate is 21%. Round answers to four decimal places (ie .1125 or 11.25%)

What is the current cost of Phillips debt capital? [ Select ]

What is the current cost of Phillips preferred equity capital? [ Select ]

What is the current cost of Phillips common equity capital (using CAPM)? [ Select ]

What is Phillips Weight Averaged Cost of Capital? [ Select ]

Use your answers above and the information below to complete the remaining questions. PROJECT CASH FLOWS Philips expects to invest $20,000,000 in new/plant equipment. The contract will last for 10 years, at which point it expects its plant equipment to have a salvage value of $10,000,000. They plan to finance this project using 70% debt and 30% equity. Their investment banker advises there are transaction costs of 1.5% on debt and 8% on equity. Phillips expects to increase its accounts receivable by $2,000,000, its inventory by $8,000,000, and its accounts payable by $3,000,000. It expects to sell 40,000 units at a price of $300/unit, with variable cost per unit of $190. It expects additional operating costs each year of $750,000. Phillips tax rate is 21%.

What is the annual depreciation for the fixed assets of this project? [ Select ]

What is the firms weighted average flotation cost? (round to four decimal places) [ Select ]

What is the firms flotation adjusted Initial Capital Expenditure? (round to nearest $100,000 [ Select ]

What is the projected Cash flow at Year 0? (round to nearest $100,000) [ Select ] What is expected Cash flow Year 1-9? (round to nearest $100,000) [ Select ]

What is the expected Cash Flow of Year 10? (round to nearest $100,000) [ Select ]

What is the projects Net Present Value? (round to nearest $10,000) [ Select ]

What is the projects Internal Rate of Return? [ Select ]

What is Phillips Accounting Break-even unit sales level? [ Select ]

What is Phillips Cash Break-even unit sales level?