Question: please help. I do not have to have the full spreadsheet Applicd Manufacturing, Inc, (AM) is a custorn metal fabrication curporationt providing a manufacturer and

Applicd Manufacturing, Inc, (AM) is a custorn metal fabrication curporationt providing a manufacturer and supplier to the acrospace and naval indtratrica. They service both major manufactures wuch as Nortam, Becine, and Airtus, as well as the Uhited States Government in contracts for both military aircraft and nuval vessels. While the existing lines of business are profitable, senior lealenhip of 16 corponation is pushing for the dependent on their existing elients. As part of its budgeting process for the next year, the senior leadenhip tean has identified three mutually exclusive projects which meet the strategic gouls mentionod above. As a menher of the senior leadenhip leam, yoe have heren antigned the tist of performing a financial analysis of these projects to determine the appropriate valuation of each one, However, before you can determine the appropriale valuations of these projects, you need to determine the weighted avenge coit of capital for the firm. Senior management has a preference in using the market values of the firm 's capital atructire and believes its current structure is optimal BALANCE SHEET Market Values of Capital - The company has 81,000 bonds with a 30-year life outstanding, with is ycars until marurity. The bonds carry a 10 percent icmi-aanual coupon, and are curreatly selling for $899.24. - The company also has 150,000 shares or $100 par, 9% dividend perpetual prefeered stock outstanding. The current market price is $90.00. Any new ismes of preferred stock would incur a 3.6% per share flotation coit. - The company has 5 million sheres of cemmoe stock oututanding with a current price of $29.84 per stiare. The stock ectibits a coeitant growth rate of 10 percent. The last dividend (D,) was $.80. New stock could be seld with flotation costs of 6.7% per share. - The risk-free rate is currently 6 pertent, and the rule of retuirm on the stock market as a whole is 13 pereent. Your stock"s beta is 1.18. - Your firm does not use notes payable for long-term financing. - Your firm's federal + state marginal tax nate is 28%. - For att projects, the reimestument rate stilt be 9.59 Project C: This project is sapnificantly outsude of the nomul products wald of the firm. The project is a reconsideration of a projoct proposed two ycan igo by i former manager. Ai that time a marketing stady costies 5200,000 was dones bowner, the project was nof tandertaken. Now the firm neods to consider if thin project is worth the firm'scapital with an additional cost of $5,000,000 ist indallintion fines. The project will be depreciated uring the MACRS schedule. At the end of the peyect, management eatimates that the equipment could be vold at a market velue of 55,000,000. This project also creates a need to increase raw goods inventory by $6,000000 During the operational cycle of this projecs, the prodoct woold havea sales price of $90.00 per unit. Costs associaled with this project wonld be $6500 in virnable cost per unit and a fixed cost per year of $5,000,000. Manugeroent estimutes that the sales: volume would be 500,000 usits in yar 1,600,000 anits in year 2,700000 units in year 3, 800,000 units in year 4, 800,000 uaits in year 5 , and 600,900 inits in year 6 . Because managenent is uneasy with undertaking a project io fir iusside of its normal product portifolio, it is imposing a 3 -percentage-point preming above the WACC as the required rate of return on the project Kequirements 1. Calculate the couts of the individual capiul components 2. Befire-tax cost of long-lermis deth b. After-tax cont of long-tern dett e. Cost of preferrod stock A. Average cont of retained eanings (ancmpe of both values below) i. Capital Acsed Pricing Model method ii. Dividend Dicount Model methed compute the WACE. (Carry weights to four decimal places. Foe example: 02973 or 29.7346 ) Evaluate each project according to Ite following valuation method: a. Net Present Value of Discounted Canh Flon b. Iniemal Rale of Return c. Modifiod Internal Rate of Retura d Paytact Period
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