Garcia recognizes that Especialistas de Vela is presently financed at its target capital structure and expects that the capital structure will be maintained if the sailboat project is undertaken.
One of Especialistas de Vela's vice presidents asks Garcia the following questions: Should we go ahead with this project? Why?
Here are some hints (getting these right will help ensure you're on the right track):
1. The weighted average cost of capital for Especialistas de Vela is:
2. The total net cash flow (€ millions) for the sailboat project in its terminal year is: