Below you can find the problem I need you to solve. As you will notice is similar to the one I sent you before. The

only difference is the in this case the WACC must be used to calculate the present value for the previously

calculated cash flows.

Please use Excel to make all the calculations so I can check what you did and the process. If you could finish this

by the $15$ it would be great because I can correct this and send the approval to the Registrar before leaving on

the $16$ th$.$ Feel free to contact me if you have any questions or problems when solving it$.$

PROBLEM

Your company is contemplating replacing their current fleet of delivery vehicles with Nissan NV vans. You will be

replacing $5$ fully depreciated vans, which you think you can sell for $$4,100$ each and which you could probably

use for another $2$ years if you chose not to replace them. The NV vans will cost $$40,000$ each in the configuration

you want them and can be depreciated using MACRS over a $5-$year life, but you are unable to make use of either

bonus depreciation or Section $179$ expensing. Expected yearly before$-$tax cash savings due to acquiring the new

vans amounts to about $$4,800$ each. If your cost of capital is $12$ percent and your firm faces a $21$ percent tax

rate, what will the cash flows for this project be$?$

Suppose the company's capital structure is $65\%$ equity and $35\%$ debt. The pre$-$tax cost of debt is $6\mathrm{.}5\%$ and the

pre$-$tax cost of equity is $13\%.$ Calculate the WACC and the present value for the project's cash flows.

Note: Round your answers to the nearest dollar amount and use two decimals for the WACC.