NPV for decision making. ed operating costs sta Corporate tax rate is 20%, WACC is 14%. Should the replacement be made a

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Npv For Decision Making Ed Operating Costs Sta Corporate Tax Rate Is 20 Wacc Is 14 Should The Replacement Be Made A 1 (72.38 KiB) Viewed 29 times

Npv For Decision Making Ed Operating Costs Sta Corporate Tax Rate Is 20 Wacc Is 14 Should The Replacement Be Made A 2 (72.38 KiB) Viewed 29 times

NPV for decision making. ed operating costs sta Corporate tax rate is 20%, WACC is 14%. Should the replacement be made all sales on credit, credit purchases 10 period 60 days, inventory turnover is 6.5 times. Assume 1 year 3. You are making investment plans for the next year. Bankers agree to extend credit million. Po is 57, Do is 4.80 g-6% and flotation costs are 10%. Expected net income for next year is 18.5 miliion of which 45% will be distributed as dividends. Capital with 18% nominal interest but increase the interest to 20% if credit is higher than 15 structure is 40% debt, 60% equity, corporate tax rate is 25%. a. Please calculate component costs and break points. b. Please calculate WACCs. c. If your only Project has IRR= 15% and initial investment of 15 million, would it be accepted? Why/why not? NPV=PV of cash inflows initial investment PIEPV of cash inflows / initial investment NWC=AR + Inv. - AP AR=(S/360) X ACP Inv. =CGS/Inv. Turnover AP= (Purchases/360) X APP WACC = Wiri Ir's Po A D, +8 Di + Tar = rd (1-T) [re Po(1-F) BP = Total Amount of lower cost capital/Its share in capital structure D = D. (1+g)