How do you calculate this? step by step and how to find the answer. Really struggling.

new shares of common stock. DEI's tax rate is 35 percent. The project requires Tunus Reeded to build the plant by issuing $1,400,000 in initial networking capital investment to get operational Assum Wharton raises all equity for new projects externally. a. Calculate the project's initial Time 0 cash flow, taking into account all side effects. b. The new RDS project is somewhat riskier than a typical project for DEI, primarily because the plant is being located overseas. Management has to you to use an adjustment factor of +2 percent to account for this increase riskiness. Calculate the appropriate discount rate to use when evaluating DETS project. c. The manufacturing plant has an eight-year tax life, and DEI uses straight-line depreciation. At the end of the project (i.e., the end of Year 5), the plant and equipment can be scrapped for $8.5 million. What is the aftertax salvage value of this plant and equipment? d. The company will incur $7.900,000 in annual fixed costs. The plan is to manufacture 18,000 RDSs per year and sell them at $10.900 per machine; the variable production costs are $9,450 per RDS. What is the annual operating cash flow (OCF) from this project? e. DEI's comptroller is primarily interested in the impact of DEI's investments on the bottom line of reported accounting statements. What will you tell her is the accounting break-even quantity of RDSs sold for this project? f. Finally, DEI's president wants you to throw all your calculations, assump- tions, and everything else into the report for the chief financial officer, all he wants to know is what the RDS project's internal rate of return (IRR) and net present value (NPV) are. What will you report? ini Case COST OF CAPITAL FOR SWAN MOTORS You have recently been hired by Swan Motors, Inc. (SMI), in its relatively new treasury management department. SMI was founded 8 years ago by Joe Swan. Joe found a method to manufacture a cheaper battery with much greater energy density than was previously possible. giving a car powered by the battery a range of 700 miles before requiring a charge. The cars manufactured by SMI are midsized and carry a price that allows the company to compete with other mainstream auto manufacturers. The company is privately owned by Joe and his family and it had sales of $97 million last year. SMI primarily sells to customers who buy the cars online, although it does have a limited number of company-owned dealerships. Most sales are online. The customer selects any cus tomization and makes a deposit of 20 percent of the purchase price. After the order is taken the car is made to order typically within 45 days. SMI's growth to date has come from its noite When the company had sufficient capital, it would expand production. Relatively little forma analysis has been used in its capital budgeting process. Joe has just read about capital hud ing techniques and has come to you for help. For starters, the company has never attemned to determine its cost of capital, and Joe would like you to perform the analysis. Because the company is privately owned, it is difficult to determine the cost of equity for the company to wants you to use the pure play approach to estimate the cost of capital for SMI, and he has cho sen Tesla Motors as a representative company. The following questions will lead you through the steps to calculate this estimate. tailing lines for com sports 10These follow the and sca the SEO vinkel download equity. erly) and 10k revious quarter of you te at www.SC G and the Commis de by Tesla. Find the mig valance sheet to find the box ru PART Risk 1. Most publicly traded corporations are required to submit 100 (quarterly) reports to the SEC detailing their financial operations over the previous respectively. These corporate filings are available on the SEC website at w to the SEC website, follow the "Search for Company Filings" link and the Other Filers" link, enter "Tesla." and search for SEC filings made by Tesla, recent 100 and 10K and download the forms. Look on the balance sheet to fin value of debt and the book value of equity. If you look further down the report find a section titled either "Long-Term Debt" or "Long-Term Debt and Interest Re Management that will list a breakdown of Tesla's long-term debt. 2. To estimate the cost of equity for Tesla, go to finance.yahoo.com and enter the ticker bol "TSLA" Follow the various links to find answers to the following questions: the most recent stock price listed for Tesla? What is the market value of equity, or more capitalization? How many shares of stock does Tesla have outstanding? What is the for Tesla? Now go back to finance.yahoo.com and follow the "Bonds" link. What is the yield on 3-month Treasury bills? Using a 7 percent market risk premium, what is the on of equity for Tesla using the CAPM? 3. Go to www.reuters.com and find the list of competitors in the industry. Find the bet ir each of these competitors, and then calculate the industry average beta. Using the indum average beta, what is the cost of equity? Does it matter if you use the beta for Tesla beta for the industry in this case? 4. You now need to calculate the cost of debt for Tesla. Go to finra-markets.momingo .com/BondCenter/Results.jsp. enter Tesla as the company, and find the yield to me for each of Tesla's bonds. What is the weighted average cost of debt for Tesla using book value weights and the market value weights? Does it make a difference in if you use book value weights or market value weights? 5. You now have all the necessary information to calculate the weighted average capital for Tesla. Calculate the weighted average cost of capital for SMI using weights and market value weights assuming SMI has a 35 percent marginal tax The gaini 87 p spec abo 200 average cost using book al mal tax rate. Which cost of capital number is more relevant? 6. You used Tesla as a representative company to estimate the cost of capital are some of the potential problems with this approach in this situation ments might you suggest? capital for SMWM situation? What improve Appendix 13A Economic Value Added and the Measur of Financial Performance To access the appendix for this chapter, please logon to Connect Finance Measurement new shares of common stock. DEI's tax rate is 35 percent. The project requires Tunus Reeded to build the plant by issuing $1,400,000 in initial networking capital investment to get operational Assum Wharton raises all equity for new projects externally. a. Calculate the project's initial Time 0 cash flow, taking into account all side effects. b. The new RDS project is somewhat riskier than a typical project for DEI, primarily because the plant is being located overseas. Management has to you to use an adjustment factor of +2 percent to account for this increase riskiness. Calculate the appropriate discount rate to use when evaluating DETS project. c. The manufacturing plant has an eight-year tax life, and DEI uses straight-line depreciation. At the end of the project (i.e., the end of Year 5), the plant and equipment can be scrapped for $8.5 million. What is the aftertax salvage value of this plant and equipment? d. The company will incur $7.900,000 in annual fixed costs. The plan is to manufacture 18,000 RDSs per year and sell them at $10.900 per machine; the variable production costs are $9,450 per RDS. What is the annual operating cash flow (OCF) from this project? e. DEI's comptroller is primarily interested in the impact of DEI's investments on the bottom line of reported accounting statements. What will you tell her is the accounting break-even quantity of RDSs sold for this project? f. Finally, DEI's president wants you to throw all your calculations, assump- tions, and everything else into the report for the chief financial officer, all he wants to know is what the RDS project's internal rate of return (IRR) and net present value (NPV) are. What will you report? ini Case COST OF CAPITAL FOR SWAN MOTORS You have recently been hired by Swan Motors, Inc. (SMI), in its relatively new treasury management department. SMI was founded 8 years ago by Joe Swan. Joe found a method to manufacture a cheaper battery with much greater energy density than was previously possible. giving a car powered by the battery a range of 700 miles before requiring a charge. The cars manufactured by SMI are midsized and carry a price that allows the company to compete with other mainstream auto manufacturers. The company is privately owned by Joe and his family and it had sales of $97 million last year. SMI primarily sells to customers who buy the cars online, although it does have a limited number of company-owned dealerships. Most sales are online. The customer selects any cus tomization and makes a deposit of 20 percent of the purchase price. After the order is taken the car is made to order typically within 45 days. SMI's growth to date has come from its noite When the company had sufficient capital, it would expand production. Relatively little forma analysis has been used in its capital budgeting process. Joe has just read about capital hud ing techniques and has come to you for help. For starters, the company has never attemned to determine its cost of capital, and Joe would like you to perform the analysis. Because the company is privately owned, it is difficult to determine the cost of equity for the company to wants you to use the pure play approach to estimate the cost of capital for SMI, and he has cho sen Tesla Motors as a representative company. The following questions will lead you through the steps to calculate this estimate. tailing lines for com sports 10These follow the and sca the SEO vinkel download equity. erly) and 10k revious quarter of you te at www.SC G and the Commis de by Tesla. Find the mig valance sheet to find the box ru PART Risk 1. Most publicly traded corporations are required to submit 100 (quarterly) reports to the SEC detailing their financial operations over the previous respectively. These corporate filings are available on the SEC website at w to the SEC website, follow the "Search for Company Filings" link and the Other Filers" link, enter "Tesla." and search for SEC filings made by Tesla, recent 100 and 10K and download the forms. Look on the balance sheet to fin value of debt and the book value of equity. If you look further down the report find a section titled either "Long-Term Debt" or "Long-Term Debt and Interest Re Management that will list a breakdown of Tesla's long-term debt. 2. To estimate the cost of equity for Tesla, go to finance.yahoo.com and enter the ticker bol "TSLA" Follow the various links to find answers to the following questions: the most recent stock price listed for Tesla? What is the market value of equity, or more capitalization? How many shares of stock does Tesla have outstanding? What is the for Tesla? Now go back to finance.yahoo.com and follow the "Bonds" link. What is the yield on 3-month Treasury bills? Using a 7 percent market risk premium, what is the on of equity for Tesla using the CAPM? 3. Go to www.reuters.com and find the list of competitors in the industry. Find the bet ir each of these competitors, and then calculate the industry average beta. Using the indum average beta, what is the cost of equity? Does it matter if you use the beta for Tesla beta for the industry in this case? 4. You now need to calculate the cost of debt for Tesla. Go to finra-markets.momingo .com/BondCenter/Results.jsp. enter Tesla as the company, and find the yield to me for each of Tesla's bonds. What is the weighted average cost of debt for Tesla using book value weights and the market value weights? Does it make a difference in if you use book value weights or market value weights? 5. You now have all the necessary information to calculate the weighted average capital for Tesla. Calculate the weighted average cost of capital for SMI using weights and market value weights assuming SMI has a 35 percent marginal tax The gaini 87 p spec abo 200 average cost using book al mal tax rate. Which cost of capital number is more relevant? 6. You used Tesla as a representative company to estimate the cost of capital are some of the potential problems with this approach in this situation ments might you suggest? capital for SMWM situation? What improve Appendix 13A Economic Value Added and the Measur of Financial Performance To access the appendix for this chapter, please logon to Connect Finance Measurement