The assets and equipment needed

Initial cost $4000000

The prices and costs, we introduce eleven types of Hybrid cars, with an average price USD 30,000. With 100 car per year. Operating Cost will be 60% of the revenue.

The financing of the project (Capital structure) we will depend on 40% debt, and 60% equity. The life or duration of the project. It's an expanding project, not a new one. And we will put a plan for five years.

Initial Capital Outlay: The initial amount that should be paid at the start of the project = $ 4000000. If cost is 60% of the revenue. Assuming average selling price is $ 30,000 per car.

With 100 car per year.

Revenue = 30,000 X 100 = $3,000,000 per year.

Cost = 3,000,000 X 60% = 1,800,000 per year.

calculate

7. The cost of capital for the project a. In general there are 3 cost of capital components: Debt, Equity and Preferred Stocks - depending on the capital structure of the project. b. The cost of capital should be adjusted to reflect the risk of the project c. It should be computed using the following formula: WACC - Word(1 - T) + Wofs + Wife