Weighted Average Cost of Capital and Net Present Value Analysis Tate Company is considering a proposal...

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Weighted Average Cost of Capital and Net Present Value Analysis Tate Company is considering a proposal to acquire new equipment for its manufacturing division. The equipment will cost $210,000, be useful for four years, and have a $16,000 salvage value. Tate expects annual savings in cash operating expenses (before taxes) of $22,000. For tax purposes, the annual depreciation deduction will be $70,000, $94,000, $30,600, and $15,400, respectively, for the four years (the salvage value is ignored on the tax returns. The income tax rate is 40% Tate establishes a hurdle rate for a net present value analys at the company's weighted average cost of capital plus 1 percentage point. Tate's capital is provided in the following proportions: debt, 60% common stock, 20% and retained earnings, 20% The cost rates for these capital sources are debt, 10%; common stock, 12% and retained earnings, 13% Compute Tate's (1) weighted average cost of capital and (2) hurdle rate. Round answers to one deomal place. For example, 04567-45.7% De Common Mock Wghted ag of capta Tatars ind Weighted Average Cost of Capital b: Upng Tase's bundle rate, compute the net present value of this capital expenditure proposal Round answers to the nearest whole number. Use rounded answers for subsequent calculations. Use a negative sign with net present value to indicate a negative amount. Otherwise do not use negative signs with your answers After Tax Cash Flow Analysis Alexa expense saving art ww Amount Value Use the pricem ally, thou Tate accept the proposal Ore shut the propal, because its present value is positive Ca shut the prop Ofee shopt the pop because prevent value is negative cause its net present value is positive tacept the propement value is negat Weighted Average Cost of Capital and Net Present Value Analysis Tate Company is considering a proposal to acquire new equipment for its manufacturing division. The equipment will cost $210,000, be useful for four years, and have a $16,000 salvage value. Tate expects annual savings in cash operating expenses (before taxes) of $22,000. For tax purposes, the annual depreciation deduction will be $70,000, $94,000, $30,600, and $15,400, respectively, for the four years (the salvage value is ignored on the tax returns. The income tax rate is 40% Tate establishes a hurdle rate for a net present value analys at the company's weighted average cost of capital plus 1 percentage point. Tate's capital is provided in the following proportions: debt, 60% common stock, 20% and retained earnings, 20% The cost rates for these capital sources are debt, 10%; common stock, 12% and retained earnings, 13% Compute Tate's (1) weighted average cost of capital and (2) hurdle rate. Round answers to one deomal place. For example, 04567-45.7% De Common Mock Wghted ag of capta Tatars ind Weighted Average Cost of Capital b: Upng Tase's bundle rate, compute the net present value of this capital expenditure proposal Round answers to the nearest whole number. Use rounded answers for subsequent calculations. Use a negative sign with net present value to indicate a negative amount. Otherwise do not use negative signs with your answers After Tax Cash Flow Analysis Alexa expense saving art ww Amount Value Use the pricem ally, thou Tate accept the proposal Ore shut the propal, because its present value is positive Ca shut the prop Ofee shopt the pop because prevent value is negative cause its net present value is positive tacept the propement value is negat