#
Question : Your task to investment project by calculate the NPv and : 9036

Your task is to investment project by calculate the NPv and the IRR of the following investment project by Company D. You need to calculate the WACC, and therefore the after-tax cost of debt, the cost of equity, the debt ratio and the equity ratio (remember that the equity ratio is equal to 1 minus the cost of equity). For the pre-tax cost of debt calculations, use the company's income statement of 2016 to arrive at an estimated credit spread with EBIT (which was $18,700,000) and the interest coverage ratio. Interest payments in 2016 were $4,170,000. The risk-free rate is 3.16% and the tax rate is 35%. We assume an equity risk premium of 6.50%, an industry premium of -1.25%, a 1.23% size premium and company premium. The company's debt is valued at $67,500,000 and its equity is value at $179,500,000. For the project, the initial investment is depreciated straight-ine the four six of the project to zero salvage value. Note that you need to compute the in working capital. (See all the information on the attached template).