Hi! Could you please answer questions 1-6 on an excel file with formulas? Thank you!Question 1
Your corporation is considering investing in a new product line. The annual revenues for the new product line are expected to be $388,000.00 with variable costs equal to 50% of these sales. In addition annual fixed costs associated with this new product line are expected to be $66,300.00. The old equipment currently has no market value. The new equipment cost $67,300.00. The new equipment will be depreciated to zero using straight-line depreciation for the three-year life of the project. At the end of the project the equipment is expected to have a salvage value of $31,300.00. An increase in net working capital of $58,000.00 is also required for the life of the project. The corporation has a beta of 1.9, a tax rate of 33%, and a target capital structure consisting of 55% equity and 45% debt. Treasury securities have a yield of 1.2% and the expected return on the market is 9.4%. In addition, the company currently has outstanding bonds that have a yield to maturity of 7.1%.
What is the total initial cash outflow? (Calculate your answer to the nearest dollar; show your answer as a negative number.)
What are the estimated annual operating cash flows? (Calculate your answer to the nearest dollar.)
What is the terminal cash flow? (Calculate your answer to the nearest dollar.)
What is the corporation’s cost of equity? (Calculate your answer to four decimal points.)
What is the WACC? (Calculate your answer to four decimal points.)
What is the NPV for this project? (Calculate your answer to the nearest dollar.)