CORPORATE FINANCE CASE STUDY

Corporate finance case study



Corporate finance case study

Calculate the project's initial investment at time 0, taking into account all side effects.

The company bought some land three years ago for $4 million

The plant and equipment will cost $35 million to build

Initial Investment

(in millions)

Land cost

$ 4

Equipment

$ 35

Initial investment cost

$ 39

b)Weighted Average Cost of Capital = Wd(Kd)(1-t)+(Wpfd)(Kpfd) +(We)(Ke)

Total Assets = Debt + Equity

Total Assets = 17040000 + (900000000 + 40000000)

Total Assets = 957040000

Cost of Debt

Wd = 240000 *940 = 17040000

Wd = 17040000/696040000 = 0.024

Kd= .075

Cost of Equity

Ordinary Share

We= 9000000*71 =639000000

We= 639000000/696040000 = 0.91

Ke= 0.05 + 1.2(.08)

Ke= 0.146

Cost of ...