WACC – Debt is 65% and Equity is 35% of this firm’s capital structure. Interest rate on the debt is 7.5%, firm’s tax rate is 22%. Firm’s beta is 1.40, Risk Free Rate is 0.82%, Market Return Rate is 8.0%.

Project Investment Outlay, Year 0 - $1,000,000

Project Investment Life – 10 years

Project Depreciation - $100,000 / year

Project Salvage Value - $30,000

Working Capital Base of Annual Sales – 10%

Expected inflation rate per year – 3.0%

Project Tax Rate – 30%

Units sold per year – 40,000

Selling Price per Unit, Year 1 - $40.00

Fixed operating costs per year excluding depreciation - $175,000

Manufacturing (Variable) costs per unit, Year 1 - $30.00