Apple is considering an investment that would extend the life of one of its facilities...
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Apple is considering an investment that would extend the life of one of its facilities for four years. The project requires upfront costs of $6.67 billion plus a $24 billion investment in equipment. The equipment will be obsolete in four years and will be depreciated via straight- line over that period. During the next four years, however, Apple expects annual sales of $60 billion per year from this facility. Material costs and operating expenses are expected to total $25 billion and $9 billion, respectively, per year. Apple expects no net working capital requirements for the project, and it pays a tax rate of 25%. a. Use your WACC to value this project by showing expected Free Cash Flows. b. Determine the NPV using the WACC you determined above. C. What key assumptions are embedded into your analysis
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