Need to compute weighted average cost of capital forinitial

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Reference no: EM13380901

Need to compute weighted average cost of capital for:

Initial investment outlay of $30 million, consisting of $25 million for equipment and $5 million for net working capital (NWC) (plastic substrate and ink inventory); NWC recoverable in terminal year
Project and equipment life: 5 years
Sales increase: $25 million annually
Assume gross margin of 60% (exclusive of depreciation)
Depreciation: Straight-line for tax purposes
Selling, general, and administrative expenses: 10% of sales
Tax rate: 35%

Reference no: EM13380901

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