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Based on the inputs below prepare a capital budget analysis for this Base Case using the Net Present Value, Internal Rate of Return, Profitability Index and Payback in years methods, determining whether the project is feasible. Please show your spreadsheet calculations and your final determinations of “go” or “no go” on the project. Use your Capital Budget Analysis from Week #6 as an example for this analysis. Project Inputs: WACC – Debt is 75% and Equity is 25% of this firm’s capital structure. Interest rate on the debt is 7.5%, firm’s tax rate is 30%. Firm’s beta is 1.25, Risk Free Rate is 2.0%, Market Return Rate is 11.0%. 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 - $30.0
Do a financial analysis on Sherwin Williams Company
For financial leverage other than fixed vs variable cost what other factors should be considered? Is it necessarily the case that a company that is comfortable with high operating leverage should be equally at ease with high financial leverage? Will ..
Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next seven years, because the firm needs to plow back its earnings to fuel growth. The company will then pay a dividend of $15.50 per share 8 years..
Calculate the current price of a $5,000 par value bond that has a coupon rate of 17 percent, pays coupon interest quarterly (i.e., 4 times per year), has 29 years remaining to maturity, and has a current yield to maturity (discount rate) of 9 percent
An American exporter has just sold €100,000 worth of shoes to a French customer. Payment is due in one year. Interest rates in dollars are 7.10 percent in the U.S. and 5 percent in the euro zone. The spot exchange rate is $1.25/€1.00. Use a money mar..
According to the Rule of 72, how long would it take for $1000 to become $8000?
Should we care about executive compensation or how much hedge fund managers earn? How should incentive compensation be changed? Should it be changed? Who can change it? Southwest Airline's CFO hedged fuel prices and saved the company hundreds of mill..
A venture recorded revenue of $1 million last year and a net profit of $100,000. Total assets were $800,000 at the end of last year. Calculate the venture's net profit margin. Calculate the venture's asset turnover. Calculate the venture's return on ..
What is the future worth of the following series of payments?
Truth Dance Company, Inc., a manufacturer of dance and exercise apparel, is considering replacing an existing piece of equipment with a more sophisticated machine. Calculate the book value of the existing asset being replaced. Calculate the tax effec..
David Maruca is planning to buy a Winnebago motor home for $150,000 with a $27,500 down payment. If he can secure a loan at 7.25%, and he needs to keep his payments at $3,800 per month, what should the term, in years, be for his loan?
One common use of product placement is to help create excitement about the launch of a new product. Implicit celebrity endorsements and authenticity are key issues to consider when judging placement opportunities.
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