Equipment Cost (Investment): $50 (million) Directions to go by for the assignment: The estimated life of the equipment will be 12 years. The salvage value of the equipment will be 5% of the...

Equipment Cost (Investment): $50 (million)

Directions to go by for the assignment:

The estimated life of the equipment will be 12 years. The salvage value of the equipment will be 5% of the equipment's cost.

The annual EBIT for this new project will be 18% of the project's cost

The company will use the straight-line method to depreciate this equipment. Use 35% as the tax rate.

The hurdle rate for this assignment will be the WACC which is 13.21%

Requirements for the Assignment (things I need answered or help with):

• Your calculations that convert the project's EBIT to free cash flow for the 12 years of the project.


• The following capital budgeting results for the assignment
  
  
  
  • Net present value
  
  
  • Internal rate of return
  
  
  • Discounted payback period.
  
  
  
  

• Should the project be accepted or rejected?