alculate the firm's WACC (using 2018 numbers). (You will need to collect information on the long-term debt and common stock equity from the Balance Sheet. The firm has no preferred stock). Use the WACC to calculate NPV and evaluate IRR for proposed capital budgeting projects. Assume the projects are mutually exclusive and the firm has the money available to fund the project.   12/31/2018 12/31/2017 12/31/2016 12/31/2015 Current Assets         Cash And Cash Equivalents 8,719,000 10,607,000 9,157,000 9,095,000 Short Term Investments 270,000 8,897,000 6,966,000 2,912,000 Net Receivables 7,140,000 7,021,000 6,693,000 6,436,000 Inventory 3,126,000 2,944,000 2,722,000 2,719,000 Other Current Assets 2,042,000 43,000 31,000 730,000 Total Current Assets 21,297,000 29,512,000 25,569,000 21,892,000           Long Term Investments 2,407,000 2,039,000 1,949,000 2,310,000 Property Plant and Equipment 17,587,000 17,237,000 16,590,000 16,316,000 Goodwill 14,806,000 14,741,000 14,429,000 14,176,000 Intangible Assets 15,823,000 13,835,000 13,432,000 13,080,000 Other Assets 5,122,000 910,000 635,000 749,000 Total Assets 77,042,000 78,274,000 72,604,000 68,523,000           Current Liabilities Accounts Payable 7,211,000 6,724,000 6,157,000 5,545,000 Short/Current Long Term Debt 3,951,000 4,017,000 4,400,000 3,108,000 Other Current Liabilities 6,601,000 4,112,000 3,870,000 3,882,000 Total Current Liabilities 17,763,000 14,853,000 14,427,000 12,535,000           Long Term Debt 28,293,000 33,793,000 30,052,000 29,591,000 Other Liabilities 12,611,000 14,522,000 11,102,000 10,466,000 Total Liabilities 58,667,000 63,168,000 55,581,000 52,592,000           Stockholders' Equity         Total Stockholder Equity 18,375,000 15,106,000 17,023,000 15,931,000             12/31/2018 12/31/2017 12/31/2016 12/31/2015 Revenue         Total Revenue 51,728,000 57,902,000 56,519,100 56,488,000 Cost of Revenue  23,502,000  25,340,000  25,399,800  25,283,000 Gross Profit 28,226,000 32,562,000 31,119,300 31,205,000           Operating Expenses         Selling General and Administrative  19,184,000  20,706,000  21,225,600  20,736,000 Operating Income or Loss 9,042,000 11,856,000 9,893,700 10,469,000           Income from Continuing Operations         Other Income/Expenses Net -1,148,000 -1,507,000 -1,508,400 -2,256,000 Interest Expense     1,220,000     1,288,000     1,207,800        853,000 Income Before Tax 6,674,000 9,061,000 7,177,500 7,360,000           Income Tax Expense     2,696,000     4,130,000     1,956,600     1,708,000 Net Income 3,978,000 4,931,000 5,220,900 5,652,000   Year 0 Year 1 Year 2 Year 3 Year 4 Project A -100,000           50,000           30,000         30,000         20,000 Project B -250,000         100,000         100,000         50,000         50,000 Project C -500,000         400,000           50,000         50,000         50,000

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
icon
Related questions
icon
Concept explainers
Topic Video
Question
  • Calculate the firm's WACC (using 2018 numbers). (You will need to collect information on the long-term debt and common stock equity from the Balance Sheet. The firm has no preferred stock).
  • Use the WACC to calculate NPV and evaluate IRR for proposed capital budgeting projects. Assume the projects are mutually exclusive and the firm has the money available to fund the project.
  •   12/31/2018 12/31/2017 12/31/2016 12/31/2015
    Current Assets        
    Cash And Cash Equivalents 8,719,000 10,607,000 9,157,000 9,095,000
    Short Term Investments 270,000 8,897,000 6,966,000 2,912,000
    Net Receivables 7,140,000 7,021,000 6,693,000 6,436,000
    Inventory 3,126,000 2,944,000 2,722,000 2,719,000
    Other Current Assets 2,042,000 43,000 31,000 730,000
    Total Current Assets 21,297,000 29,512,000 25,569,000 21,892,000
             
    Long Term Investments 2,407,000 2,039,000 1,949,000 2,310,000
    Property Plant and Equipment 17,587,000 17,237,000 16,590,000 16,316,000
    Goodwill 14,806,000 14,741,000 14,429,000 14,176,000
    Intangible Assets 15,823,000 13,835,000 13,432,000 13,080,000
    Other Assets 5,122,000 910,000 635,000 749,000
    Total Assets 77,042,000 78,274,000 72,604,000 68,523,000
             
    Current Liabilities
    Accounts Payable 7,211,000 6,724,000 6,157,000 5,545,000
    Short/Current Long Term Debt 3,951,000 4,017,000 4,400,000 3,108,000
    Other Current Liabilities 6,601,000 4,112,000 3,870,000 3,882,000
    Total Current Liabilities 17,763,000 14,853,000 14,427,000 12,535,000
             
    Long Term Debt 28,293,000 33,793,000 30,052,000 29,591,000
    Other Liabilities 12,611,000 14,522,000 11,102,000 10,466,000
    Total Liabilities 58,667,000 63,168,000 55,581,000 52,592,000
             
    Stockholders' Equity        
    Total Stockholder Equity 18,375,000 15,106,000 17,023,000 15,931,000
             
  •   12/31/2018 12/31/2017 12/31/2016 12/31/2015
    Revenue        
    Total Revenue 51,728,000 57,902,000 56,519,100 56,488,000
    Cost of Revenue  23,502,000  25,340,000  25,399,800  25,283,000
    Gross Profit 28,226,000 32,562,000 31,119,300 31,205,000
             
    Operating Expenses        
    Selling General and Administrative  19,184,000  20,706,000  21,225,600  20,736,000
    Operating Income or Loss 9,042,000 11,856,000 9,893,700 10,469,000
             
    Income from Continuing Operations        
    Other Income/Expenses Net -1,148,000 -1,507,000 -1,508,400 -2,256,000
    Interest Expense     1,220,000     1,288,000     1,207,800        853,000
    Income Before Tax 6,674,000 9,061,000 7,177,500 7,360,000
             
    Income Tax Expense     2,696,000     4,130,000     1,956,600     1,708,000
    Net Income 3,978,000 4,931,000 5,220,900 5,652,000
  •   Year 0 Year 1 Year 2 Year 3 Year 4
    Project A -100,000           50,000           30,000         30,000         20,000
    Project B -250,000         100,000         100,000         50,000         50,000
    Project C -500,000         400,000           50,000         50,000         50,000
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps with 2 images

Blurred answer
Knowledge Booster
Capital Budgeting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education