X Firm Z has a capital structure that consists of 30% common stock and 70% LT debt. The dompany has 15-year bonds outstanding with semi-annual coupon of 8%. The bonds are selling at $966.24 now. The risk-free rate is 5%. The market risk premium is 4% The beta of the stock is 1.1. The company's tax rate is 21%. Given this information, what is firm's WACC? X. What is the purpose of sensitivity analysis? Which variable is the most important? Why? Discount rale 8% 9% 10% 3 Cash flow -1000 400 What is the single discount rate NPV for the project above? 500 600 with at least 2 decimal places) that could yield the same I wo independent projects are as follows (discount rate -15%) Project X: -10mil Smil 4mil 3mil 2mil Project Y: -Omil 2mil 3.5mil 4.5mil 5.5mil Please calculate the NPV and IRR for each project. Do they lead to the same decision? Why? 5. A project's sales in units are: Yrl=50K; Yr2=100K: Yr3=100K: Yr4=70K, Yr5=50K Price/unit is $135 for all 5 years. If the initial NWC is $100,000, the total required annual NWC after today is 10% of the same year's sales. What is the additional NWC required each year? 6: XYZ Co. is considering two mutually exclusive projects, Project A and Project B. The projects have the following cash flows. Both projects have a 10% of WACC. Year 0 1 2 3 4 Project A -600 150 200 250 300 Project B 500 300 300 350 -300 At what discount rate would the two projects have the same NPV? 4. Company Z is considering a project with the following cash flows: Year 0 1 2 3 CF X 150 150 300 If the project has a PB period of 2.4 years and a WACC of 10%. What is the project's NPV? R. A project's initial investment will be $1 mil. SL depreciation over 4-year project life without salvage. The first year's sales are expected to be $2 mil, growing 10% cach year after. VCs will be 60% of annual sales. FCs will be $150,000 annually. The one-time initial NWC is $200,000 Suppose the required rate of return is 10%, and tax rate is 21% 8. What are the annual sales? 9. What are the annual free cash flows (FCFY