PROJECT 4 INFORMATION: FOR FORMULAS & EXAMPLE Retro Handoute/Audio Lecture Chapter 10-12 WACC wat Newington Chemicals has planned capital expenditures of $1.500,000 for the coming fiscal year They have prioritized five projects at a total cost of $1.500.000, to be financed in the following way Debt $300,000 Preferred Stock 300,000 Common Equity 900.000 The bonds have a coupon rate of 7% and will sell for par value. The preferred stock is 10%, 5100 par It sells for par value with $7 per share flotation costs. The common stock of the company sells for $75 per share with flotation costs of $5.00 per share. It is expected to pay a $9 dividend in the coming year. The company's growth rate is expected to be constant 86%. The company's tax rate is 30% The Net Income for the Company this year is expected to be $1,000,000. The dividend payout ratio is 70%. Assume the beginning retained earnings balance = 0. PRIMARY POST: Complete the required calculations, fill in the highlighted areas in the chart Fall in all yellow highlighted areas in the below chart and then copy and paste into your Discuss Post) (Include answers with work similar to Example below EXAMPLE: DEBT 30/90 30 2.465/4-6635 2.1879 CAS 50/90= 56 450 05-13 7.28 WACC 1 Source: Weight: Cost of Capitat:% Weighted Cost: Debt RANGE: P/S CIE WACC 1 WACC 2 Source Debt Weight: Cost of Capital: Weighted Cost: RANGE: PIS CIE WACC 2 = REPLY POST: Assume the cash flow from one of the five capital budgeting projects is as follows. Using the correst WACC from the primary post. calculate the NPY using WACC 1 and WACC2 fill in the highlighted areas in the chart and post your answer in Discuss in the below. Table Format: 1) Year CASH FLOW NPV WACCI NPV WACC2 0 1 2 3 (35,100) 17,000 15,000 13,000 NPV = 2) Should this project be accepted or rejected? Explain PROJECT 4 INFORMATION: FOR FORMULAS & EXAMPLE Refer to Handouts/Audio Lecture for Chapter 10-12 and WACC with BreakPoint Newington Chemicals has planned capital expenditures of $1,500,000 for the coming fiscal year. They have prioritized five projects at a total cost of $1,500,000, to be financed in the following way Debt $300,000 Preferred Stock 300,000 Common Equity 900,000 The bonds have a coupon rate of 7% and will sell for par value. The preferred stock is 10%, $100 par. It sells for par value with $7 per share flotation costs. The common stock of the company sells for $75 per share with flotation costs of $5.00 per share. It is expected to pay a $9 dividend in the coming year. The company's growth rate is expected to be constant at 6%. The company's tax rate is 30%. The Net Income for the Company this year is expected to be $1,000,000. The dividend payout ratio is 70%. Assume the beginning retained earings balance = 0. PRIMARY POST: Complete the required calculations, fill in the highlighted areas in the chart and post your answer in Discuss in the below Table Format: (Fill in all yellow highlighted areas in the below chart and then copy and paste into your Discuss Post) (Include answers with work similar to Example below) EXAMPLE: DEBT 30/90 = 33 9.465/1--3) = 6.63% 2.1879 C/S 50/90 = 56 4/50+.05 = 13% 7.28 WACC 1 Source: Weight: Cost of Capital: % Weighted Cost: Debt RANGE: PIS CIE WACC 1 = WACC 2 Source Weight: Debt Cost of Capital: % Weighted Cost: RANGE: P/S CIE WACC 2 = PROJECT 4 INFORMATION: FOR FORMULAS & EXAMPLE Retro Handoute/Audio Lecture Chapter 10-12 WACC wat Newington Chemicals has planned capital expenditures of $1.500,000 for the coming fiscal year They have prioritized five projects at a total cost of $1.500.000, to be financed in the following way Debt $300,000 Preferred Stock 300,000 Common Equity 900.000 The bonds have a coupon rate of 7% and will sell for par value. The preferred stock is 10%, 5100 par It sells for par value with $7 per share flotation costs. The common stock of the company sells for $75 per share with flotation costs of $5.00 per share. It is expected to pay a $9 dividend in the coming year. The company's growth rate is expected to be constant 86%. The company's tax rate is 30% The Net Income for the Company this year is expected to be $1,000,000. The dividend payout ratio is 70%. Assume the beginning retained earnings balance = 0. PRIMARY POST: Complete the required calculations, fill in the highlighted areas in the chart Fall in all yellow highlighted areas in the below chart and then copy and paste into your Discuss Post) (Include answers with work similar to Example below EXAMPLE: DEBT 30/90 30 2.465/4-6635 2.1879 CAS 50/90= 56 450 05-13 7.28 WACC 1 Source: Weight: Cost of Capitat:% Weighted Cost: Debt RANGE: P/S CIE WACC 1 WACC 2 Source Debt Weight: Cost of Capital: Weighted Cost: RANGE: PIS CIE WACC 2 = REPLY POST: Assume the cash flow from one of the five capital budgeting projects is as follows. Using the correst WACC from the primary post. calculate the NPY using WACC 1 and WACC2 fill in the highlighted areas in the chart and post your answer in Discuss in the below. Table Format: 1) Year CASH FLOW NPV WACCI NPV WACC2 0 1 2 3 (35,100) 17,000 15,000 13,000 NPV = 2) Should this project be accepted or rejected? Explain PROJECT 4 INFORMATION: FOR FORMULAS & EXAMPLE Refer to Handouts/Audio Lecture for Chapter 10-12 and WACC with BreakPoint Newington Chemicals has planned capital expenditures of $1,500,000 for the coming fiscal year. They have prioritized five projects at a total cost of $1,500,000, to be financed in the following way Debt $300,000 Preferred Stock 300,000 Common Equity 900,000 The bonds have a coupon rate of 7% and will sell for par value. The preferred stock is 10%, $100 par. It sells for par value with $7 per share flotation costs. The common stock of the company sells for $75 per share with flotation costs of $5.00 per share. It is expected to pay a $9 dividend in the coming year. The company's growth rate is expected to be constant at 6%. The company's tax rate is 30%. The Net Income for the Company this year is expected to be $1,000,000. The dividend payout ratio is 70%. Assume the beginning retained earings balance = 0. PRIMARY POST: Complete the required calculations, fill in the highlighted areas in the chart and post your answer in Discuss in the below Table Format: (Fill in all yellow highlighted areas in the below chart and then copy and paste into your Discuss Post) (Include answers with work similar to Example below) EXAMPLE: DEBT 30/90 = 33 9.465/1--3) = 6.63% 2.1879 C/S 50/90 = 56 4/50+.05 = 13% 7.28 WACC 1 Source: Weight: Cost of Capital: % Weighted Cost: Debt RANGE: PIS CIE WACC 1 = WACC 2 Source Weight: Debt Cost of Capital: % Weighted Cost: RANGE: P/S CIE WACC 2 =