1. An investment of $2,000,000 was made in an Ice cream plant. The plant requires $1,000,000 in repairs. The plant will be sold in 3 years for $1,500,000 to a local CO-OP. The cashflow of the plant are $1 million in year 1, $2 million in year 2, and $1 million in year 3. Calculate NPV. The cost of capital is 12%.
2. Using the above information calculate the IRR of the ice cream plant.
3. A factory currently has an equity position of $4 million with a cost of 10 %, the preferred equity position is $2 million with an annual cost of 15%, the company has assets worth $9,000,000. The tax rate is 40 %, and the debt cost is $200,000. Please calculate with a tax rate of 40%.
4. The debt of this company is currently 60% of the assets, the remaining capital structure is financed with common equity with a cost of 3%. The cost of debt was $800,000 for the entire $10,000,000 of the firm’s liabilities. Please calculate the WACC with a tax rate of 40%.
5. A seminar series has set up costs of $3000. A rent per event of $1000, plus a variable cost of $30 per attendee for food, supplies, and refreshments. The price of the seminar admission is $100 per person. What is the break even in a) units(people) and b) dollars for each seminar? C) How many paying attendees must register and pay to profit $15,000 in an event.