Week $7$ Focus: Final Project Details

Dear class,

Some of you request to have more information about Week $7$ final project.

In Week $7,$ your primary goal is to follow the instructions of the final project, and complete the final project before the deadline.

Please see the attached Excel template $dar{r}_{}.$ When you open the Excel file, there are four sheets. You will first need to calculate

the WACC based on the market values of the three types of capital: bond, preferred stock, and common stock.

The blue color shaded cells are numbers that you will need to fill in either from the PDF project description document or based on

your calculations. The green color shaded cells are the final answers required in this final project. There are NO functions

embedded in each cell. You will need to figure out all the required information if you are using the template.

Note that you will also need to prepare a Word document explaining the three projects and perform a comparative analysis. You

will provide the relevant suggestions as a member of the senior leadership team based on your analysis.

I hope this Excel file helps you have a better understanding of what is expected. This project is highly related to Chapters $10-12.$

Most of the formulas that you will need in this project can be easily found in the three chapters.

For the reinvestment rate, if you decide to use WACC for calculations, then you do not need to use the reinvestment rate. So you

can just ignore the reinvestment rate.

Please submit the Word and Excel documents to Canvas. Missing either one of them will not be graded.

For the Word document, please carefully format it in APA format including any necessary citations. Please make sure to cite the

Word of God properly in APA. Although there is no specific requirement regarding the word count, you should provide sufficient

evidence from your calculations to support your recommendations. I expect your Word document should at least have the

following: the title page, the main body evaluating each project and your recommendation from your evaluations with evidence and

a Christian worldview discussion, the reference page at least containing the reference of the Word of God.

If you have a chance to review the rubric attached to Unit $7$ Final Research Paper assignment, there are $60$ points associated

with Christian worldview integration. Please note that I will follow the rubric provided on Canvas to grade the final paper, so if

you do not have a Christian worldview discussion, you will not receive the $60$ points associated with it$.$

Please continue to work hard and let me know if you have additional questions.

Have a great day. ${?}^{{?}^{?}}{?}^{?}$

Best,

MBA $643$ FINANCIAL MANAGEMENT

FINAL PROJECT

Applied Manufacturing, Inc. $($AM$)$ is a custom metal fabrication corporation providing a

wide range of goods and services to its customers. For decades, AM has been a parts

manufacturer and supplier to the aerospace and naval industries. They service both major

manufacturers such as Nordam, Boeing, and Airbus, as well as the United States

Government in contracts for both military aircraft and naval vessels. While the existing

lines of business are profitable, senior leadership of the corporation is pushing for the

creation of new lines of business that will generate new revenue streams that are not

dependent on their existing clients.

As part of its budgeting process for the next year, the senior leadership team has

identified three mutually$-$exclusive projects which meet the strategic goals mentioned

above. As a member of the senior leadership team, you have been assigned the task of

performing a financial analysis of these projects to determine the appropriate valuation of

each one. However, before you can determine the appropriate valuations of these

projects, you need to determine the weighted average cost of capital for the firm. Senior

management has a preference in using the market values of the firm's capital structure

and believes its current structure is optimal.

BALANCE SHEET

Market Values of Capital

The company has $81,000$ bonds with a $30-$year life outstanding, with $15$ years until

maturity. The bonds carry a $10$ percent semi$-$annual coupon, and are currently selling

for $$899\mathrm{.}24.$

The company also has $150,000$ shares of $$100$ par, $9\%$ dividend perpetual preferred

stock outstanding. The current market price is $$90\mathrm{.}00.$ Any new issues of preferred

stock would incur a $3\mathrm{.}6\%$ per share flotation cost.

The company has $5$ million shares of common stock outstanding with a current price

of $$29\mathrm{.}84$ per share. The stock exhibits a constant growth rate of $10$ percent. The last

dividend $(D_0)$ was $$\mathrm{.}80.$ New stock c