25 Projected Balance Sheet 0 1 2 3 4 5 6 26 Cash and Marketable Sec. $0 $90, 175 $185,325 $286,075 $392,425 $498,725 $605,025 27 Other Current Assets (Inventory and Receivables) $15,000 $17,025 $17, 175 $17,325 $17,475 $17,475 $17,475 28 Fixed Assets 29 At cost $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 $300,000 30 Accumulated Depreciation / Amortization $0 $30,000 $60,000 $90,000 $120,000 $150,000 $180,000 31 Net Fixed Assets $300,000 $270,000 $240,000 $210,000 $180,000 $150,000 $120,000 32 Total Assets $315,000 $377,200 $442,500 $513,400 $589,900 $666,200 $742,500 33 34 Current Liabilities (Payables) $0 $2,700 $2,900 $3, 100 $3,300 $3,300 $3,300 35 LT Debt $0 $0 $0 $0 $0 $0 $0 36 Total Liabilities $0 $2,700 $2,900 $3, 100 $3,300 $3,300 $3,300 37 Stock and accumulated retained earnings $315,000 $374,500 $439,600 $510,300 $586,600 $662,900 $739,200 38 Total Liabilities and Equity $315,000 $377,200 $442,500 $513,400 $589,900 $666,200 $742,500 39 40 Working Capital (Non-Cash Current Assets less Current Liabilities) 41 Change in working capital 42 43 Projected Free Cash Flows to the Project 44 Net Income 45 Depreciation / Amortization 46 Change in working capital 47 Capital Expenditures (fixed assets at cost) 48 After tax salvage value (Terminal Value) 49 Free Cash Flows 50N mummhw 10 11 12 13 14 15 16 17 18 19 20 21 22 IV Moon Bakery Ilnstructions: Please read the PDF le attached with the case study and extract whatever information you may need from there. Most of that information is already populated. You are required to fill in the highlighted cells. You do not need to write a separate report in this case. Everything needs to be done in this sheet. Assumptions Expected Investment Cost $300,000 Risk Free Rate 3.00% Market Beta 0.70 CAPM calc for rS rs = marginal cost of common Equity Risk Premium 5.50% equity -r5 = rRF + 0.0685 rd = required return on Cost of Debt 0.88% Debt Cost of Equity 4.80% Tax rate 30% WACC 5.68% IWACC = wdrd(1 T) + wprp + wcrs 0.05677 "assumption is equity risk premium is same thing as market risk premium Income statement all ures are incremental 0 1 2 3 4 5 6 Revenue (Sales) $135,000 $145,000 $155,000 $165,000 $165,000 $165,000 Production Costs ($20,000) ($22,000) ($24,000) ($26,000) ($26,000) ($26,000) Depreciation / Amortization ($30,000) ($30,000) ($30,000) ($30,000) ($30,000) ($30,000) Prot Before tax $85,000 $93,000 $101,000 $109,000 $109,000 $109,000 Taxes ($25,500) ($27,900) ($30 300) ($32,700) ($32,700) ($32,700) Prot after tax (Net income $59,500 $65,100 $70,700 $76,300 $76,300 $76,300 NPV Note: Your NPV and Payback calculations should be based on the Should the company undertake the project? Free Cash Flows and WACC. You cancluated these values above. Payback Analysis (when do cash flows sum positive?) Discounted Payback Analysis