Answer Happy

nts ons As the CEO of a western wear manufacturing company called Over Y'alls. Your marketing department has come up with two potential work boots which you believe will only have a large enough demand to maintain market for five years (before the style gets old). You believe that the adoption of one of those two products will not affect the viability of the other product. You estimate that Style 1 will cost $52,075 up front to set up, whereas Style 2 will cost $47,930 up front. The expected cash flows from those two boot designs over the life of the boots can be found in the table below. Both projects have similar risks to current projects at Over Y'Alls, therefore the appropriate discount rate for both projects should be our current WACC of 5.35%. Calculate the net present value of both projects, and enter in the box below how much the value of the firm is expected to increase based on this capital budget (please enter the amount to the nearest penny). Year 1 Year 2 Year 3 Year 4 Year 5 Style 1 $21,768 $19,363 $11,771 $13,005 $9,515 Style 2 $17,073 $3,526 $9,570 $10,715 $7,060