KADS, Inc., has spent $350,000 on research to develop a new computer game. The firm is planning to spend $150,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $45,000. The machine has an expected life of three years, a $70,000 estimated resale value, and falls under the MACRS 7-year class life. Revenue from the new game is expected to be $550,000 per year, with costs of $200,000 per year. The firm has a tax rate of 40 percent, an opportunity cost of capital of 12 percent, and it expects net working capital to increase by $75,000 at the beginning of the project.
	What will the cash flows for this project be? (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.)
0		1		2		3
$		$		$		$

calculate WACC in excel Johnny Cake Ltd. has 8 million shares of stock outstanding selling at $21 per share and an issue of $40 million in 9 percent annual coupon bonds with a maturity of 18 years selling at 93.5 percent of par. Assume Johnny Cakes weighted-average tax rate is 34 percent its next dividend is expected to be $3 per share and all future dividends are expected to grow at 6 percent per year indefinitely. What is its WACC?

Compute the MIRR statistic for Project J if the appropriate cost of capital is 10 percent. (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Project J
Time:	0	1	2	3	4	5
Cash flow	$1,300	$440	$1,630	$550	$390	$130

MIRR

%

Should the project be accepted or rejected?

	Rejected
	Accepted