Start with the partial model in the attached.

Pinto.com has developed a powerful new server that would be used for corporations' Internet activities. It would cost $25 million at Year 0 to buy the equipment necessary to manufacture the server. The project would require net working capital at the beginning of each year in an amount equal to 12% of the year's projected sales; for example, NWC0 = 12%(Sales1 ). The servers would sell for $21,000 per unit, and Pinto believes that variable costs would amount to $15,000 per unit. After Year 1, the sales price and variable costs will increase at the inflation rate of 2.5%. The company's nonvariable costs would be $1.5 million at Year 1 and would increase with inflation. The server project would have a life of 4 years. If the project is undertaken, it must be continued for the entire 4 years. Also, the project's returns are expected to be highly correlated with returns on the firm's other assets. The firm believes it could sell 2,000 units per year. The equipment would be depreciated over a 5-year period, using MACRS rates. The estimated market value of the equipment at the end of the project's 4-year life is $1 million. Pinto.com's federal-plus-state tax rate is 20%. Its cost of capital is 10% for average-risk projects, defined as projects with a coefficient of variation of NPV between 0.8 and 1.2. Low-risk projects are evaluated with an 8% project cost of capital and high-risk projects at 13%.

Develop a spreadsheet model, and use it to find the project's NPV, IRR, and payback.

Now conduct a sensitivity analysis to determine the sensitivity of NPV to changes in the sales price, variable costs per unit, and number of units sold. Set these variables' values at 10% and 20% above and below their base-case values.

Now conduct a scenario analysis. Assume that there is a 25% probability that best-case conditions, with each of the variables discussed in Part b being 20% better than its base-case value, will occur. There is a 25% probability of worst-case conditions, with the variables 20% worse than base, and a 50% probability of base-case conditions.

If the project appears to be more or less risky than an average project, find its risk-adjusted NPV, IRR, and payback.

On the basis of information in the problem, would you recommend the project should be accepted

3. Edna Recording Studios, Inc, reported earnings available to common stock of $5 million last year. From these the company paid a dividend of $2 on each of its 1,000,000 common shares outstanding. The capital structure of the company include 30% debt, 20% preferred stock, 10% new common stock, and 40% retained earnings. It's taxed at 40%% tax rate. (20 points) a) The company can issue $1000 par value, 8% coupon, 5-year bonds that can be sold for $1200 each. Flotation costs would amount to $20 per bond. Calculate cost of debt financing. b) The company can issue $3.00 dividend preferred stock for a market price of $40 per share. Flotation costs would amount to $2.00 per share. What is the cost of preferred stock financing. c) If the market price of the common stock is $50 and dividends are expected to grow at a rate of 5% per year, what is the company cost of retained earnings financing? d) If the underpricing and flotation costs on new shares of common stock amount to $8 per share, what is the company's cost of new common stock financing? e) Calculate WACC. Solution:Academic) of Finance | Fall20 Assume the following information about the market and Saham Stock. Saham's beta = 1.30, the risk-free rate is 2.20%, the market risk premium is 9.0%. What is the expected return for the firm's stock? Select one: 0 a, 8.84% O b. 13.90% O G 17.84% O d. 11.04% OFe. 15.80% Next page to search a hoMUSWEI Stock Xyz has a market beta of 0.8. The risk-free rate is 2%, and the market risk premium equals 5%. Compute the expected return for stock Xyz. (3 points) Assume the true expected return is 7%. What is stock Xyz's alpha? (Assume that the CAPM is the correct asset pricing model.) (3 points) . Is stock Xyz fairly priced, underpriced, or overpriced? Please explain your answer for full credit. (2 points)Incorrect Question 4 0 / 1 pts Tesla recently raised 5 billion dollars by selling additional shares in Tesla on the stock market. General Motors did not issue new stock last Friday but 15 million shares were bought and sold at around $30 a share. Which of the following is true? O Both are an example of equity finance. O Neither is an example of equity finance. O The Tesla sale is an example of equity finance but the other is not. O The GM sale is an example of equity finance but the other is not