Forecast

A capital project analysis was completed which determined that WCC should move ahead with

the acquisition as it has a positive NPV and IRR above WCC$\text{'}$s WACC. Management now wants to

understand the impact on WCC$\text{'}$s financial statements going forward and how the acquisition will

impact the income statement, balance sheet and debt level.

WCC$\text{'}$s finance, corporate development and operations departments have developed the

following five$-$year forecast assumptions for WCC which considers both its current operations

and the addition of the Carolina Waste Corp. operations.

Income Statement

$2023$ revenue levels will increase at an annual rate of $5\mathrm{.}0\%$

The acquisition will add $$75\mathrm{.}0$ million of incremental revenue in $2024$ and it will increase

at an annual rate of $5\mathrm{.}0\%$ thereafter

Cost of services will be $62\mathrm{.}5\%$ of revenue

SG&A expense will be $9\mathrm{.}5\%$ of revenue

Depreciation expense will be $7\mathrm{.}5\%$ of revenue

Interest expense will be based on the average debt outstanding and an interest rate of

$7\mathrm{.}5\%$