Target debt–equity ratio

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Miller Manufacturing has a target debt–equity ratio of 0.65. Its cost of equity is 16 percent, and its cost of debt is 5 percent. If the tax rate is 34 percent, what is Miller’s WACC?

Purple Haze Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $533362 is estimated to result in some amount of annual pretax cost savings. The press will have an aftertax salvage value at the end of the project of $85754. The OCFs of the project during the 4 years are $175948, $195683, $171329 and $169667, respectively. The press also requires an initial investment in spare parts inventory of $28807, along with an additional $4312 in inventory for each succeeding year of the project. The shop's discount rate is 10 percent. What is the NPV for this project?

Reference no: EM131896891

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