WACC Debt is 65% and Equity is 35% of this firms capital structure. Interest rate on
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WACC – Debt is 65% and Equity is 35% of this firm’s capital structure. Interest rate on the debt is 7.5%, firm’s tax rate is 22%. Firm’s beta is 1.40, Risk Free Rate is 0.82%, Market Return Rate is 8.0%.
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
Related Book For
Financial reporting, financial statement analysis and valuation a strategic perspective
ISBN: 978-0324789416
7th Edition
Authors: James M Wahlen, Stephen P Baginskl, Mark T Bradshaw
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