Question: How do you complete the market data? Here is the rest of the information. Disaster had struck on the night of 4/28/23 wherein malware all

How do you complete the market data?

How do you complete the market data? Here is the rest of

Here is the rest of the information.

the information. Disaster had struck on the night of 4/28/23 wherein malware

all but wiped out the work of the analysts. Shantel needed to

prepare a financial analysis of the project to present the Board with

Disaster had struck on the night of 4/28/23 wherein malware all but wiped out the work of the analysts. Shantel needed to prepare a financial analysis of the project to present the Board with recommendations. All the staff had already left for their annual vacation and Shantel was working alone. Shantel quickly reached the office and managed to salvage what was left of the excel spreadsheet prepared for the presentation. What follows is some basic information that Shantel knew and was able to retrieve about the project. PSUWC's existing plant has excess capacity, in a fully depreciated building, to install and run the new equipment to produce the new Designer Womens Tops linc. Due to relatively rapid advances in technology, the project was expected to be discontinued in four years. The new Designer Womens Tops was expected to sell for $94 per unit and had projected sales of 5300 units in the first year, with a projected (Most-Likely scenario) 22.0% growth rate per year for subsequent years. A total investment of $1,079,000 for new equipment was required. The equipment had fixed maintenance contracts of $ 340,892 per year with a salvage value of $136,459 and variable costs were 11% of revenues. Shantel also needed to consider both the Best-Case and Worst-Case scenarios in the analysis with growth rates of 32.00% and 2.20% respectively. The new equipment would be depreciated to zero using straight line depreciation. The new project required an increase in working capital of $241,500 and $24,150 of this increase would be offset with accounts payable. PSUWC currently has 1190000 shares of stock outstanding at a current price of $67.00. Even though the company has outstanding stock, it is not publicly traded and therefore there is no publicly available financial information. However, after analysis management believes that its cquity beta is 1.12 . The company also has 79000 bonds outstanding, with a current price of $1,033.00. The bonds pay interest semiannually at a coupon rate of 6.50%. The bonds have a par value of $1,000 and will mature in 10 years. The average corporate tax rate was 30%. Management believes the S\&P 500 is a reasonable proxy for the market portfolio. Therefore, the cost of equity is calculated using the company's equity beta and the market risk premium based on the S\&P 500 annual expected rate of return - Shantel would calculate the monthly expected market return using 5 years of past monthly price data available in the worksheet Marketdata. This would then be multiplied by 12 to estimate the annual expected rate. Shantel remembered that if the expected rate of return for the market was too low, too high, or negative, a forward looking rate of an historical average of about 9.5% would have to be used, as the calculated value for the current 5 year period may not be representative of the future. Shantel would consider a E(Rm) between 812% acceptable. Shantel would calculate the market risk premium: E(Rm) - Rf from the previous calculations using the risk-free rate data available in the worksheet Marketdata. Shantel noted that the risk-free rate was on an annual basis. Shantel needed to calculate the rate at which the project would have to be discounted to calculate the Net Present Value (NPV) of the proposed project based on the decision of raising capital and the current capital market environment. This discount rate, the WACC, would obviously influence the NPV and could affect the decision of whether to accept or reject the project. Thankfully, all the information needed to calculate this was available. Shantel needed to clearly show all the calculations and sources for all parameter estimates used in the calculation of the WACC (and ultimately the NPV). Most-Likely Case - NPV Profile \begin{tabular}{|r|r|r|r|r|r|r|} \multicolumn{1}{|r|}{ Year } & \multicolumn{1}{l}{ CF } & PV(CF) & PV(CF) & \multicolumn{1}{l|}{ PV(CF) } & \multicolumn{1}{l|}{ PV(CF) } & \multicolumn{1}{l|}{ PV(CF) } \\ \hline 0 & $(1,320,500.00) & $(1,320,500.00) & $1,320,500.00 & $1,320,500.00 & $1,320,500.00 & $1,320,500.00 \\ \hline 1 & $152,679.20 & $152,679.20 & $149,685.49 & $146,806.92 & $144,036.98 & $141,369.63 \\ \hline 2 & $220,962.49 & $220,962.49 & $212,382.25 & $204,292.24 & $196,655.83 & $189,439.72 \\ \hline 3 & $304,268.11 & $304,268.11 & $286,718.63 & $270,493.24 & $255,469.37 & $241,537.83 \\ \hline 4 & $742,922.26 & $742,922.26 & $686,345.33 & $635,053.06 & $588,464.01 & $546,070.04 \\ \hline NPV & $100,332.06 & $100,332.06 & $64,074.47 & $199,179.14 & $310,356.07 & $401,916.54 \\ \hline \multicolumn{1}{|l|}{ Discount Rate } & 0% & 2% & 4% & 6% & 8% \\ \hline \end{tabular} Most-Likely Case NPV Profile Discount Rate --.---> Disaster had struck on the night of 4/28/23 wherein malware all but wiped out the work of the analysts. Shantel needed to prepare a financial analysis of the project to present the Board with recommendations. All the staff had already left for their annual vacation and Shantel was working alone. Shantel quickly reached the office and managed to salvage what was left of the excel spreadsheet prepared for the presentation. What follows is some basic information that Shantel knew and was able to retrieve about the project. PSUWC's existing plant has excess capacity, in a fully depreciated building, to install and run the new equipment to produce the new Designer Womens Tops linc. Due to relatively rapid advances in technology, the project was expected to be discontinued in four years. The new Designer Womens Tops was expected to sell for $94 per unit and had projected sales of 5300 units in the first year, with a projected (Most-Likely scenario) 22.0% growth rate per year for subsequent years. A total investment of $1,079,000 for new equipment was required. The equipment had fixed maintenance contracts of $ 340,892 per year with a salvage value of $136,459 and variable costs were 11% of revenues. Shantel also needed to consider both the Best-Case and Worst-Case scenarios in the analysis with growth rates of 32.00% and 2.20% respectively. The new equipment would be depreciated to zero using straight line depreciation. The new project required an increase in working capital of $241,500 and $24,150 of this increase would be offset with accounts payable. PSUWC currently has 1190000 shares of stock outstanding at a current price of $67.00. Even though the company has outstanding stock, it is not publicly traded and therefore there is no publicly available financial information. However, after analysis management believes that its cquity beta is 1.12 . The company also has 79000 bonds outstanding, with a current price of $1,033.00. The bonds pay interest semiannually at a coupon rate of 6.50%. The bonds have a par value of $1,000 and will mature in 10 years. The average corporate tax rate was 30%. Management believes the S\&P 500 is a reasonable proxy for the market portfolio. Therefore, the cost of equity is calculated using the company's equity beta and the market risk premium based on the S\&P 500 annual expected rate of return - Shantel would calculate the monthly expected market return using 5 years of past monthly price data available in the worksheet Marketdata. This would then be multiplied by 12 to estimate the annual expected rate. Shantel remembered that if the expected rate of return for the market was too low, too high, or negative, a forward looking rate of an historical average of about 9.5% would have to be used, as the calculated value for the current 5 year period may not be representative of the future. Shantel would consider a E(Rm) between 812% acceptable. Shantel would calculate the market risk premium: E(Rm) - Rf from the previous calculations using the risk-free rate data available in the worksheet Marketdata. Shantel noted that the risk-free rate was on an annual basis. Shantel needed to calculate the rate at which the project would have to be discounted to calculate the Net Present Value (NPV) of the proposed project based on the decision of raising capital and the current capital market environment. This discount rate, the WACC, would obviously influence the NPV and could affect the decision of whether to accept or reject the project. Thankfully, all the information needed to calculate this was available. Shantel needed to clearly show all the calculations and sources for all parameter estimates used in the calculation of the WACC (and ultimately the NPV). Most-Likely Case - NPV Profile \begin{tabular}{|r|r|r|r|r|r|r|} \multicolumn{1}{|r|}{ Year } & \multicolumn{1}{l}{ CF } & PV(CF) & PV(CF) & \multicolumn{1}{l|}{ PV(CF) } & \multicolumn{1}{l|}{ PV(CF) } & \multicolumn{1}{l|}{ PV(CF) } \\ \hline 0 & $(1,320,500.00) & $(1,320,500.00) & $1,320,500.00 & $1,320,500.00 & $1,320,500.00 & $1,320,500.00 \\ \hline 1 & $152,679.20 & $152,679.20 & $149,685.49 & $146,806.92 & $144,036.98 & $141,369.63 \\ \hline 2 & $220,962.49 & $220,962.49 & $212,382.25 & $204,292.24 & $196,655.83 & $189,439.72 \\ \hline 3 & $304,268.11 & $304,268.11 & $286,718.63 & $270,493.24 & $255,469.37 & $241,537.83 \\ \hline 4 & $742,922.26 & $742,922.26 & $686,345.33 & $635,053.06 & $588,464.01 & $546,070.04 \\ \hline NPV & $100,332.06 & $100,332.06 & $64,074.47 & $199,179.14 & $310,356.07 & $401,916.54 \\ \hline \multicolumn{1}{|l|}{ Discount Rate } & 0% & 2% & 4% & 6% & 8% \\ \hline \end{tabular} Most-Likely Case NPV Profile Discount Rate --.--->

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