Question: Please answer as quickly as possible. I only have a two hour window. Kentucky Hardware Company (KHC) is considering an investment project that requires a

Please answer as quickly as possible. I only have a two hour window.

Kentucky Hardware Company (KHC) is considering an investment project that requires a new machine for producing special tools. This new machine costs $800,000 and will be depreciated over five years on a straight-line basis toward zero salvage value. KHC paid a consulting company $50,000 last year to help them decide whether there is sufficient demand for the special tools. In addition to the investment on the machine, KHC invests $30,000 in net working capital. KHC also has estimated the performance of the new machine and believes that the new machine will produce $450,000 per year in sales, $200,000 per year in cost of goods sold, and $30,000 per year in administrative expenses. The company pays $45,000 in interest expenses annually and has average tax rate 35%.

In order to get an estimate of cost of capital, KHC collect the following information.

Debt: 10,000 6.4% coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 110.69% of par; the bonds make semiannual payments.

Common stock: 495,000 shares outstanding, selling for $63 per share; the beta is 1.05; KHCs most recent dividend was $2.73 per share, and dividends are expected to grow at an annual rate of 5% indefinitely.

Preferred stock: 35,000 shares outstanding, selling for $72 per share; the preferred stock dividend is $3.5 per share.

Market: 8.8% market risk premium and 0.75% risk-free rate.

Please answer as quickly as possible. I only have a two hour

QUESTION 28 What is the payback period for the investment project? 0 a. 6.01 years 0 b. 4.58 years C. 4.15 years O d. 3.82 years QUESTION 29 What is the net present value for the investment project? 0 a,-$15,033.21 O b. $69,023.88 O c. $23,619.42 O d.-$25,278.31 QUESTION 30 What is the internal rate of return for the investment project? a. 9.21% b. 6.54% C. 7.32% d. 8.43% QUESTION 31 What is the profitability index for the project? a.-1.07 O b. 0.98 Oc. 1.07 d.-0.98

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