Would potentially befinanced with a rights issue

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Reference no: EM133589277

Question Unilever is currently evaluating a new project (called 'Stay Healthy') to produce organic and vegan food. The project will require an initial outlay of€65m and is expected to have a three-year life span. The projected cash flows associated with the project are displayed in the below table: Table 1: Unilever Plc potential project's cash flow information All figures in €'m 2021 20222023Sales 85.0 87.0 92.0COGS (46.8) (47.9) (50.6)Gross Profit 38.3 39.2 41.4Operating Expenses (2.0) (2.5) (3.0)EBITDAa 36.3 36.7 38.4Depreciation (1.0) (1.0) (1.0)EBITa 35.3 35.7 37.4Tax Expense (6.3) (6.4) (6.7)EBIATa 28.9 29.2 30.7 CAPEXb 2 3 2Investment in Working Capital 0 0 5aEBITDA: Earnings Before Interest, Taxes, Depreciation and Amortisation. EBIT: Earnings before Interest and Taxes. EBIAT: Earnings Before Interest and After Taxes. For simplicity, Taxes calculated assuming no interest expense. bAnnual capital expenditures in addition to the initial outlay, and assumed to cease at the end of the project. The project has a debt capacity of 50% of the cost of the project, with an annual interest charge of 5%. The company currently has €10m of retained earnings available for this project, and the remainder would potentially befinanced with a rights issue. The rights issue incurs additional

Reference no: EM133589277

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