Calculate WACC and Rate of Return
Capital Structure:
50% debt and 50% equity financingCurrent cost of debt is 2% above prime (Prime is currently 2.5%)cost of equity is estimated to be 20%Marginal tax rate is 37%Investment:
Equipment that costs $850,000Installation Fees of $10,000Updates every year $2,000 (assuming they dont need a update until the end of the first year)
My work:Capitalizing on the equipment, we have $860,000
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