Task: Collect the annual income statements of any company you know well for the last four fiscal years. The selected company must be in the process of expanding its business and plans to invest in a new investment project. As a newly hired MBA in the capital budgeting division you have been asked to evaluate a new project using the Weighted Average Cost of Capital (WACC), Adjusted Present Value (APV), and Flow-to-Equity (FTE) methods. You will need to compute the appropriate costs of capital and the net present values with each method. Because this is your first assignment with the company, they want you to demonstrate your ability to apply the different methods of project evaluation. You must seek required information necessary to determine the free cash flows. Create a spreadsheet in Excel to do all your calculations.
Question 1: Determine the WACC for the company. Compute the NPV of the new project based on the free cash flows you calculated using the WACC method.
Question 2: Determine the NPV using the APV and FTE methods. In both cases, assume the company maintains the target leverage ratio you computed in WACC.
Question 3: Compare the results under the three methods and explain how the resulting NPVs are achieved under each of the three different methods.
Need APA referencing on this tutorial.