Question: WACC & Capital Budget Analysis - Based on the inputs below how do you calculate WACC & capital budget analysis for this Base Case using

WACC & Capital Budget Analysis - Based on the inputs below how do you calculate WACC & capital budget analysis for this Base Case using the Net Present Value, Internal Rate of Return, Profitability Index and Payback in years methods, determining whether the project is feasible.

Project Inputs:

WACC - Debt is 70% and Equity is 30% of this firm's capital structure. Interest rate on the debt is 7.5%, firm's tax rate is 22%. Firm's beta is 1.50, Risk Free Rate is 3.0%, Market Return Rate is 9.0%.

Project Investment Outlay, Year 0 - $1,000,000

Project Investment Life - 10 years

Project Depreciation - $100,000 / year

Project Salvage Value - $30,000

Working Capital Base of Annual Sales - 10%

Expected inflation rate per year - 3.0%

Project Tax Rate - 30%

Units sold per year - 40,000

Selling Price per Unit, Year 1 - $40.00

Fixed operating costs per year excluding depreciation - $175,000

Manufacturing (Variable) costs per unit, Year 1 - $30.00

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