please help! show work!

Student instructions Une the forces we come We Are Cost of CR (WACC)for breakouts UI WACCOM you can set for all you were in the ghost Produtos outstanding on os proferred WACC facts Barking Dog Corp Cost of Capital Given Optimal Capital Structure 25 Debt 10N Preferred quity 65 Common Equity Net income for the coming year $4,000,000 Use Retained Earnings for common equity unti completely exhausted for that year don't spend previous years) Dividends policy is to distribute 60% of annual Nas dividends Current RE are 0 30% Tax rate 10 11 TE 13 14 TE Borrowing units and Interest Rates: 16 17 TH 19 20 1 Amount Borrowed Oto $400,000 over $400.000 Interest Rate 8% 129 Common Stock price DO: $60 Preferred Stock price $5 for the coming your DO 7X $35 54 for the coming year Te DI Common Stock price: DO 560 Preferred Stock price: $5 for the coming year DO 7% 8% $36 $4 for the coming year Float 24 25 a. Component costs of capital: 21 2n 29 After-tax cost of debt, ATkd (1) Alter-tax cost of debt, ATRd (2) Cost of Preferred Stock, P Cost of existing equity (RE), TRE Cost of new equity.IN per ATPdBT kd1-TRO up to $400,000 borrowed per AT rd BT Try it over $400,000 borrowed per the dividend growth model per the dividend growth model and CAPM per the dividend growth model and CAPM 30 31 22 33 54 35 36 b. MCC break points: Debt break point: based on 25% debt financing Equity break point: 3 Net Income Dividends RE available Cost of new equity.IN per the dividend growth model and CAPM . M b. MCC break points: Debt break point based on 25 debt financing Equity breakpoint: Net Income Dividends RE available based on 65% common equity financing Break point c. MCC figures, using higher rates for equity and debt when past break point: WACC up to 1st break point: Marginal CC between 1st & 2nd break points: Marginal after 2nd break point: Uses higher costs of debt Uses higher costs of capital 2 3 Student instructions. Use the forecasting variables to complete the discounted free cash flow forecast and valuation shown below. Enter formulas in the blanks where indicated to complete the calculations needed. These incremental cash flows would require an initial $0,000,000 equipment investment Terminal Cash flow would be an inflow of 51,000,000 don't forget to add this in the end AFTER TAXES), Discount rate is highest Marginal Cost of Capital from the previous tab, but reinvestment rate is 12%. Find NPV, IRR, MIRR, and Discounted Payback. 5 2 The Discounted Free Cash Flow Model for Total Equity Barking Dog Corporation Initial Capital Invesment 9,000,000 Salvage (Terminal value at the end of 2025 1.000.000 Income tax rate 30% Assumed long-term sustainable growth rate 5% Capital Gains Tax Rate 20% Discount rate Use the most expensive WACC Reinvestment rate 12% 13 1 15 Forecasting Variables: Sales units growth factor Price growth Factor Expected Cost of Goods Sold (COGS) of Revenues S, G. & A expense of revenues 2022 SX 74 60 10% 2023 10% 7% SON 10% 2024 15% 79 45% 10% 2025 20% 2 40W 10% 10% Expected Cost of Goods Sold (COGS) of Revenues 5, G, & A expense of revenues Depr. & Amort.% of Gross Capital Investment 10% 60% 50% 4525 1096 10% MACRS 3 Year Depreciation (spread over 4 years) 33.33% 44.45% 14,81% 7.41% Actual Problem: Initial Capital Invesment Salvage (Terminal) value at the end of 2025 Increase in inventory and AR (for ANOWC) Increase in accruals and AP (for ANOWC) Income tax rate Assumed long-term sustainable growth rate Discount rate 9,000,000 1,000,000 1,500,000 1,000,000 30% 6 Use the most expensive WACC from previous tab Discounted Free Cash Flow Model Barking Dog Corporation Operating Cash Fit Actual Base Yr 2021 Years Ending December 31 -Forecast 2022 2023 2024 2025 Total unit sales 1,000,000 Operating Cash Flow Actual Base Yr 2021 2024 2023 2025 2022 Total unit sales Price Total Revenues 1,000,000 $6 $6,000,000 Cost of Goods Sold Gross profit Selling, general and administrative expenses 10% Revenues Earnings before interest, taxes, depr. & amort. (EBITDA) Depreciation and amortization usine MACRS Earnings before Interest and taxes (EBIT) No Interest payments now Federal and State Income Taxes (30%) Net Operating Profit After-Tax (NOPATEBIT. Takt) Add Back Depreciation (EBIT - Tax) + Depreciation (Free Cash flows for the years) At termination of the project: 1,000,000.00 11 12 51 Sale of Fixed Asset, 2025 Capital Gain/Loss Tax Liability (Capital Gains tax of 20%) FCF from termination of project Recover A NOWC Annual Free Cash Flow from above 59 61 Discount rate from WACC sheet NPV IRR MIRR AI Reinvestment Rate of 12% Discounted Payback Present Value of Free Cash Flows + ANOWCOWACC Net Cumulative Discounted Free Cash Flow Discounted Payback 73 Student instructions Une the forces we come We Are Cost of CR (WACC)for breakouts UI WACCOM you can set for all you were in the ghost Produtos outstanding on os proferred WACC facts Barking Dog Corp Cost of Capital Given Optimal Capital Structure 25 Debt 10N Preferred quity 65 Common Equity Net income for the coming year $4,000,000 Use Retained Earnings for common equity unti completely exhausted for that year don't spend previous years) Dividends policy is to distribute 60% of annual Nas dividends Current RE are 0 30% Tax rate 10 11 TE 13 14 TE Borrowing units and Interest Rates: 16 17 TH 19 20 1 Amount Borrowed Oto $400,000 over $400.000 Interest Rate 8% 129 Common Stock price DO: $60 Preferred Stock price $5 for the coming your DO 7X $35 54 for the coming year Te DI Common Stock price: DO 560 Preferred Stock price: $5 for the coming year DO 7% 8% $36 $4 for the coming year Float 24 25 a. Component costs of capital: 21 2n 29 After-tax cost of debt, ATkd (1) Alter-tax cost of debt, ATRd (2) Cost of Preferred Stock, P Cost of existing equity (RE), TRE Cost of new equity.IN per ATPdBT kd1-TRO up to $400,000 borrowed per AT rd BT Try it over $400,000 borrowed per the dividend growth model per the dividend growth model and CAPM per the dividend growth model and CAPM 30 31 22 33 54 35 36 b. MCC break points: Debt break point: based on 25% debt financing Equity break point: 3 Net Income Dividends RE available Cost of new equity.IN per the dividend growth model and CAPM . M b. MCC break points: Debt break point based on 25 debt financing Equity breakpoint: Net Income Dividends RE available based on 65% common equity financing Break point c. MCC figures, using higher rates for equity and debt when past break point: WACC up to 1st break point: Marginal CC between 1st & 2nd break points: Marginal after 2nd break point: Uses higher costs of debt Uses higher costs of capital 2 3 Student instructions. Use the forecasting variables to complete the discounted free cash flow forecast and valuation shown below. Enter formulas in the blanks where indicated to complete the calculations needed. These incremental cash flows would require an initial $0,000,000 equipment investment Terminal Cash flow would be an inflow of 51,000,000 don't forget to add this in the end AFTER TAXES), Discount rate is highest Marginal Cost of Capital from the previous tab, but reinvestment rate is 12%. Find NPV, IRR, MIRR, and Discounted Payback. 5 2 The Discounted Free Cash Flow Model for Total Equity Barking Dog Corporation Initial Capital Invesment 9,000,000 Salvage (Terminal value at the end of 2025 1.000.000 Income tax rate 30% Assumed long-term sustainable growth rate 5% Capital Gains Tax Rate 20% Discount rate Use the most expensive WACC Reinvestment rate 12% 13 1 15 Forecasting Variables: Sales units growth factor Price growth Factor Expected Cost of Goods Sold (COGS) of Revenues S, G. & A expense of revenues 2022 SX 74 60 10% 2023 10% 7% SON 10% 2024 15% 79 45% 10% 2025 20% 2 40W 10% 10% Expected Cost of Goods Sold (COGS) of Revenues 5, G, & A expense of revenues Depr. & Amort.% of Gross Capital Investment 10% 60% 50% 4525 1096 10% MACRS 3 Year Depreciation (spread over 4 years) 33.33% 44.45% 14,81% 7.41% Actual Problem: Initial Capital Invesment Salvage (Terminal) value at the end of 2025 Increase in inventory and AR (for ANOWC) Increase in accruals and AP (for ANOWC) Income tax rate Assumed long-term sustainable growth rate Discount rate 9,000,000 1,000,000 1,500,000 1,000,000 30% 6 Use the most expensive WACC from previous tab Discounted Free Cash Flow Model Barking Dog Corporation Operating Cash Fit Actual Base Yr 2021 Years Ending December 31 -Forecast 2022 2023 2024 2025 Total unit sales 1,000,000 Operating Cash Flow Actual Base Yr 2021 2024 2023 2025 2022 Total unit sales Price Total Revenues 1,000,000 $6 $6,000,000 Cost of Goods Sold Gross profit Selling, general and administrative expenses 10% Revenues Earnings before interest, taxes, depr. & amort. (EBITDA) Depreciation and amortization usine MACRS Earnings before Interest and taxes (EBIT) No Interest payments now Federal and State Income Taxes (30%) Net Operating Profit After-Tax (NOPATEBIT. Takt) Add Back Depreciation (EBIT - Tax) + Depreciation (Free Cash flows for the years) At termination of the project: 1,000,000.00 11 12 51 Sale of Fixed Asset, 2025 Capital Gain/Loss Tax Liability (Capital Gains tax of 20%) FCF from termination of project Recover A NOWC Annual Free Cash Flow from above 59 61 Discount rate from WACC sheet NPV IRR MIRR AI Reinvestment Rate of 12% Discounted Payback Present Value of Free Cash Flows + ANOWCOWACC Net Cumulative Discounted Free Cash Flow Discounted Payback 73