With the information provided, can you put in writing whether or not this investment is a project that should be accepte

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answerhappygod
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With the information provided, can you put in writing whether or not this investment is a project that should be accepte

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With the information provided, can you put in writing whether ornot this investment is a project that should be accepted orrejected by this Company, given the 10-year projected analysisbelow? While answering this question show why the project should beaccepted or rejected according to its results (below) relative toits: NPV, WACC, APV, FTE (flow to equity), cost to equity and costto debt percentages/ratios, and debt-to-value ratio:
Investment = 1.5 billion
Expected life = 10 years
Anticipated free cash flows = 220 million in first year
Growth = 10% for 2 years
5% for 7 years
CALCULATING THE WACC:
Cost of debt = 5.52%
Cost of equity =
Risk free rate = 1.98%
Beta = 0.72
Market risk premium = 4.50%
Current stock price = 102.59
Outstanding shares = 3.17 billion
Tax rate = 0.394
Debt to value ratio = 1.87
Debt value = 128201000
CALCULATING WEIGHTS:
VALUE
WEIGHT
EQUITY
325210300
57.56%
DEBT
239735870
42.44%
564946170
100%
Cost of debt = 3.34%
Cost of equity = 5.22%
WACC = 4.42%
Calculating: NPV Year / Cash flows
Year 0 - 1500000000
Year 1 - 220000000
Year 2 - 242000000
Year 3 - 266200000
Year 4 - 279510000
Year 5 - 293485500
Year 6 - 308159775
Year 7 - 323567763.75
Year 8 - 339746151.9375
Year 9 - 356733459.534375
Year 10 - 374570132.511094
NPV - $839,403,101.19
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