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you are the cfo of The Products Co the company provides the following information about its capital structure.

debt: 200,000 bonds outstanding with par value of $1,000, plays 9% interest (semi annual) has maturity of 15 years and quoted price of $137.55 a bond.

preferred shares: firm has 2 million preferred shares outstanding wth market price of $12 per share. pays annual dividend 2.4% on par value of $50.

common stock: 14 million shares outstanding with $20.00 per share. firm is expected to pay a $2.20 common dividend one year from today and that dividend is expected to increase by 5% per year forever.

firm is considering a 3 year expansion project that's requires a purchase of a machine of $210,000. increase in inventory of $150,000, accounts receivable o f $35,000 and account payable of $75,000. machine will be in 3 year macrs class and annual depreciation rates are 33% in year 1, 44% in year 2, 15% in year 3, and 8% in year 4.

project is expected to generate EBITDA of $80,000 each year. at end of year 3, machine can be sold for $25,000. tax rate 21%

find common equity. solve for cost of preferred stock solve for before tax and after tax cost of debt. calculate weights of equity, debt and preferred stock. what is firms weighted average cost of capital what is net cash flow at time 0 what is annual depreciation in years 1, 2 , 3 what is annual cash flow from operations in year 1,2,3 compute after tax salvage value in year 3 what is terminal cash flow for year 3 what are few cash flows in years 0,1,2,3 calculate npv, irr, mirr, pi ratio, payback period, and discounted payback period for projects

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