Product being produced BLOUSES Target Market Dallas / Ft Worth Primary Sales Channel Retail Outlets / Malls
Question:
Product being produced BLOUSES
Target Market Dallas / Ft Worth
Primary Sales Channel Retail Outlets / Malls
Online Presence yes
Price of the product (year 1) $18.21
Annual growth rate on price 3.4%
Number of items sold (year 1)450000
Annual growth rate on units sold 2.75%
Variable cost per unit $5.75
Variable cost increase each year 4.25%
Fixed Costs $3,400,000
Fixed costs increasing each year 3.25%
Depreciation Method (all CAPEX) straight line
Depreciation period (all CAPEX)5 years
Tax rate 21%
Initital Working Capital $520,000
Add'tnl Working Capital One time (year 4) $150,000
Initial Investmnet for Equipment (year 0) $8,800,000
Suplemental Capital Required (year 3) $1,500,000
Market Vale of All Equipment Year 10 $2,000,000
Risk Free Rate (rfr)3.50%
Beta (b)1.12
S&P 500 Avg Return (MR)12%
Cost on Debt 6%
Tax Shield Eligible Yes
% of Equity in Cap Structure 75%
% of Debt in Cap Structure 25%
1)Build a 10-year discounted cash flow model based on the provided data to analyze the opportunity.
2)Using the provided data calculate the WACC and use this as your discount rate.
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr