How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Annie Kavitha Your Own Question

Annie Kavitha
Annie Kavitha, Teacher
Category: Homework
Satisfied Customers: 1024
Experience:  Master of Commerce
Type Your Homework Question Here...
Annie Kavitha is online now
A new question is answered every 9 seconds

Finance Question MT 217 can manufacture the new PDA for

This answer was rated:

Finance Question

MT 217 can manufacture the new PDA for $200 each in variable costs. Fixed costs for the operation are estimated to run $4.5 million per year. The estimated sales volume is 70,000, 80,000, 100,000, 85,000, and 75,000 per each year for the next five years, respectively. The unit price of the new PDA will be $340. The necessary equipment can be purchased for $16.5 million and will be depreciated on a 5 year straight-line schedule.

Net working capital investment for the PDAs will be $6,000,000 this year. Of course NWC will be recovered at the projects end. MT 217 has a 35 percent corporate tax rate.

MT 217 ’s capital structure is 40% debt with an after-tax cost of 8% and 60% equity costing 16%,

Sherry has asked Doug to prepare a report that answers the following questions:

1.What is MT 217 ’s WACC, which will be used as the required rate of return for this project?
2.What is the IRR of the project?
3.What is the NPV of the project, based on the WACC (required rate of return)?

You need to spend $3 to view this post. Add Funds to your account and buy credits.
Annie Kavitha and 5 other Homework Specialists are ready to help you

Related Homework Questions