Question: hey can you hell me on these please USE THE FOLLOWING INFORMATION TO ANSWER 33-37 Dunaway Industries is evaluating the idea of expanding their production

hey can you hell me on these please hey can you hell me on these please USE THE FOLLOWING INFORMATION

USE THE FOLLOWING INFORMATION TO ANSWER 33-37 Dunaway Industries is evaluating the idea of expanding their production facility in Cobb County. The CFO gathered the following data. - Dunaway Industries spent $500,000 researching other sites for their expansion. - The equipment needed for the expansion will cost $25,800,000 fully installed. The equipment will be depreciated over 20 years to a salvage value of $1,000,000. Dunaway Industries uses straight-line depreciation. If Dunaway accepts the project, the company will sell the equipment for salvage value (i.e., $1,000,000 ) at the end of the life of the project. - If Dunaway Industries adds the new equipment, sales are expected to increase by $17,400,000 and costs are expected to increase by $10,000,000. - The appropriate tax rate for Dunaway Industries is 30% - The capital of the firm includes 75% of equity and 25% of debt. - Dunaway Industries recently issued a bond with 30 years to maturity that pays a coupon of 7.50% semiannually. The $1,000 par bond sold for $956.77. - The market believes that Dunaway Industries will pay a dividend of $2.42(D1=2.42) on their common stock next year and that the dividend will grow at 4.00% forever. The current stock price is $22.00. 33. What is the WACC of the firm? a. 12.18% b. 12.28% c. 12.65% d. 12.55% e. 12.88% 34. What is the depreciation expense per year created by the project? a. $2,720,000 b. $2,780,000 c. $1,240,000 d. $1,230,000 e. $1,220,000 35. What is the incremental cash flow per year of the project for year 1-19? a. $5,552,000 b. $5,900,000 c. $5,567,000 d. $5,549,000 e. $5,237,000

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!