Determine the cost of capital for your discounted cash flow. Debt to Equity is 75% Interest...

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Determine the cost of capital for your discounted cash flow. Debt to Equity is 75% Interest rate on the debt is 5.50% Current Risk-Free Rate is .80% Current Market Premium Rale is 7.25% The firm's beta is 1.30 Project Investment Outlay, Year 0-$700,000 Project Investment Life - 7 years Project Depreciation - $100,000/year Project Salvage Value - $55,000 Working Capital Base of Annual Sales - 8% Expected inflation rate per year, Selling Price Per Unit - 2.00% Expected inflation rate per year, Manufacturing Cost per unit - 1.50% Expected inflation rate per year, Fixed operating costs per year - 1.50% Project Tax Rate - 20% Units sold per year 40,000 Selling Price per Unit, Year 1 - $45.00 Fixed operating costs per year excluding depreciation - $75,000 Manufacturing costs per unit, Year 1-$35.00 Determine the cost of capital for your discounted cash flow. Debt to Equity is 75% Interest rate on the debt is 5.50% Current Risk-Free Rate is .80% Current Market Premium Rale is 7.25% The firm's beta is 1.30 Project Investment Outlay, Year 0-$700,000 Project Investment Life - 7 years Project Depreciation - $100,000/year Project Salvage Value - $55,000 Working Capital Base of Annual Sales - 8% Expected inflation rate per year, Selling Price Per Unit - 2.00% Expected inflation rate per year, Manufacturing Cost per unit - 1.50% Expected inflation rate per year, Fixed operating costs per year - 1.50% Project Tax Rate - 20% Units sold per year 40,000 Selling Price per Unit, Year 1 - $45.00 Fixed operating costs per year excluding depreciation - $75,000 Manufacturing costs per unit, Year 1-$35.00

Answer rating: 100% (QA)

To determine the cost of capital for the discounted cash flow we can use the weighted average cost o... View the full answer