Mike's Company has a marketing opportunity that will cost $518,867, it will increase net income by $242,867 the first year, $243,320 the second year, $281,188 the third year and $233,328 the fourth year. Using the WACC as the discount rate what is the overall profit or loss of this marketing campaign in todays dollars?

Mike has issued 19,077 $1000 face value bonds currently selling at 100% of par. They have 1,090,152 shares of common stock outstanding currently selling at $60 and  no preferred stock. The after tax cost of debt is 3.76% and cost of equity is 15%

Answer rating: 100% (QA)

To calculate the overall profit or loss of the marketing campaign in todays dollars we need to calculate the present value PV of the net income for ea... View the full answer