Treasury bill rate is 3.00%	All-equity "Ice-Cream Factory" Firm's Beta is 1.22	If no loan is used, the eight year project requires $2,800,000 to be spent on the initial investment (equipment, and other fixed assets)
Expected return on the market is 11.00%	"Ice-Cream Factory" Firm's cost of equity is 12.76%	If no loan is used, the estimated Net Present Value equals -$68,080. It is based on the following estimated total project cash flows:
	"Ice-Cream Factory"'s new project's Beta is 1.66, if no loan is used	If no loan is used, the total project cash flow in Year 0 is an outflow of $2,800,000
	"Ice-Cream Factory"'s new project's required return is 16.28%, if no loan is used	If no loan is used, the total project cash flow at the end of Years 1 through 7 is $570,000
	"Ice-Cream Factory"'s new project's Beta is 3.15, if loan is used	If no loan is used, the total project cash flow at the end of the final Year is $1,500,000
	"Ice-Cream Factory"'s new project's required return is 28.23%, if loan is used	All income is taxed at 40% tax rate
		You are analyzing the possibility that 60% of the initial investment will be covered with a riskless interest-only loan

When you got up in the morning, and had a big cup of strong coffee, you were about to leave for work to turn in your report when you accidentally dropped a huge dusty pile of mail sitting on a console table by your front door. When you looked down at the floor right in the middle of the mess you saw a long forgotten book somebody'd given you a long time ago, titled "WACC for Dummies". WACC... Something lit up in your memory!... Of course! There was another way to estimate profit from a financed project! You decided that being late for work by an hour is worth it. You'll just say that your car broke down. It's always worked in the past. Just this one last time...

And so you got back to your desk and started crunching more numbers......

For all calculations below: Increase the decimal places for all intermediate calculations. This will help you to not miss points due to rounding errors. Round all dollar amounts that you fill into the fields to WHOLE number, and do NOT use the "$" signs. If your value indicates a cash OUTFLOW, don't forget to put the minus sign! Otherwise, for all cash INFLOWS, type your value with no sign. Round all percentages to the 2nd decimal place. HINT #1: The 2nd and the 3rd digits of your loan amount should be "6" and "8". HINT #2: Some of the numbers you need to fill out are already given. HINT #3: If applicable, for the debt-to-equity ratio use debt-to-book-value-of-equity rather that debt-to-market-value-of-equity.

To apply the WACC method to financed project valuation, you need to know what to use for the project's cash flows. Here they are: (Round to whole dollar, and do not use the "$" sign.)

	Beginning of the project (Year 0)	End of Years 1 ~ 7	End of the project (end of Year 8)
Total project cash flow	$	$	$

You also need to figure out what to use for the discount rate. You looked into your "WACC for Dummies" book, and - voila! - here it is, black on white. The appropriate discount rate that needs to be used to discount these cash flows equals %. (Round to 2 decimal places. Notice that the rate should be in percent, not in decimals.)

Finally, your estimate of the Net Present Value of this project recalculated for this case is $. And so, when you finally get to work and give to your boss a report with your glowing-in-the-dark analyses of the project, your recommendation based on this approach will be to (type accept or reject) this project.