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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Shadowland, a manufacturer of air-freightable pet crates, has identified two projects that, though having a relatively high risk, are expected to move the company into new revenue markets. Utilize a spreadsheet solution to ( a ) select any combination of the projects if the MARR is equal to the aftertax WACC and ( b ) determine if the same projects should be selected if the risk factors are enough to require an additional 2% per year for the investment to be made.
|
Project |
Initial |
After-Tax Cash |
Life, Years |
|
Wildlife (W) |
250,000 |
48,000 |
10 |
|
Reptiles (R) |
125,000 |
30,000 |
5 |
Financing will be developed using a D-E mix of 60–40 with equity funds costing 7.5% per year. Debt fi nancing will be developed from $10,000, 5% per year, paid quarterly, 10-year bonds. The effective tax rate is 30% per year.
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