# The Company’s overall WACC is 7.5 percent. However, the proposed project is riskier than the average project; the new project’s WACC is estimated to be 10 percent. ? The Company’s tax rate is 30 percent. ? What is the net present value, internal ra

05 / 03 / 2018 Assignment

This paper circulates around the core theme of The Company’s overall WACC is 7.5 percent. However, the proposed project is riskier than the average project; the new project’s WACC is estimated to be 10 percent. ? The Company’s tax rate is 30 percent. ? What is the net present value, internal ra together with its essential aspects. It has been reviewed and purchased by the majority of students thus, this paper is rated 4.8 out of 5 points by the students. In addition to this, the price of this paper commences from £ 45. To get this paper written from the scratch, order this assignment now. 100% confidential, 100% plagiarism-free.

Chill Mount Creamery manufactures a variety of Ice creams. The company is considering introducing a new product (Yugo cream). The company’s manager has been provided with the following information by their business analyst.
? The project has an anticipated economic life of 5 years.
?The Company plans to spend \$1,300,000 on advertising campaign to boost sales.
?The Company’s interest expense each year will be \$500,000.
? The Company is required to purchase a new machine to produce the new product. The machine’s initial cost is \$5,500,000. The machine will be depreciated on a straight – line basis over 5 years. The Company anticipates that the machine will last for 10 years; the salvage value after 5 years is \$500,000.
? Six months ago the Company also paid \$300,000 to a firm to do research regarding new product.
? If the Company goes ahead with the new product, it will have an effect on the Company’s net operating capital. The forecasted net working capital will be \$200,000 (at time zero)
? The new product is expected to generate sales revenue of \$1,500,000, 2,500,000, 3,500,000, 4500,000 and 5,500,000 in year 1, 2, 3, 4 and 5 respectively. Each year the operating cost (not including depreciation) expected to equal 30 percent of sales revenue.
? In addition the Company expects with introduction of new product, sale of other ice cream increase by \$500,000 after taxes each year.
? The Company’s overall WACC is 7.5 percent. However, the proposed project is riskier than the average project; the new project’s WACC is estimated to be 10 percent.
? The Company’s tax rate is 30 percent.
? What is the net present value, internal rate of return, payback period, discounted payback period, and profitability index of the proposed project. Based on your analysis should the project be accepted? Discuss.

### 100% Plagiarism Free & Custom Written

International House, 12 Constance Street, London, United Kingdom,
E16 2DQ

Company # 11483120

## STILL NOT CONVINCED?

We've produced some samples of what you can expect from our Academic Writing Service - these are created by our writers to show you the kind of high-quality work you'll receive. Take a look for yourself!

View Our Samples

## Benefits You Get

• Free Turnitin Report
• Unlimited Revisions
• Installment Plan
• Plagiarism Free Guarantee
• 100% Confidentiality
• 100% Satisfaction Guarantee
• 100% Money-Back Guarantee
• On-Time Delivery Guarantee

+44 7340 9595 39
+44 20 3239 6980
[email protected]
AKOSZTEC “International House, 12 Constance Street, London, United Kingdom, E16 2DQ”

Hire Researcher
Rated 4.7/5 based on 8956 Reviews

## Supporting Pages

FLAT 25% OFF ON EVERY ORDER. Use "FLAT25" as your promo code during checkout