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Category > Business & Finance Posted 20 Jun 2017 My Price 11.00

Capital Budgeting Worksheet

Capital Budgeting Worksheet

Your company currently has a debt-to-total assets ratio of 0.35. Additionally, your company has a tax rate of 32%, a beta of 1.2, and no preferred stock outstanding. Your companyAc€?cs bonds have a 5% coupon rate, a yield to maturity rate of 8.5% and mature in 5 years. Currently, a five-year Treasury note is yielding 1.25% and the historic return on the S&P 500 is 11.5 percent. What is our companyAc€?cs weighted average cost of capital (WACC)?

Find the NPV, IRR, Payback Period, Discounted Payback Period, Profitability Index, and MIRR (assuming that funds are reinvested at WACC) for the following projects. Use the WACC found in question one.

Projects

Year 0

Year 1

Year 2

Year 3

Year 4

Year 5

Project A

-250

0

0

100

500

1,000

Project B

-600

100

150

300

150

100

Project C

-150

50

50

50

50

50
 

Project A

Project B

Project C

NPV

      

IRR

      

MIRR

      

PI

      

Payback Period

      

Discounted Payback

      

Accept or Reject

      

If the projects were independent, which project(s) should you invest in? If the company followed your advice, how much value would be added to the company?

If the projects were mutually exclusive, which project(s) should you invest in? If the company followed your advice, how much value would be added to the company?

Answers

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Status NEW Posted 20 Jun 2017 06:06 AM My Price 11.00

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