As a financial consultant, you have contracted with Wheel Industries to evaluate their procedures involving the evaluation of long term…

As a financial consultant, you have contracted with Wheel Industries to evaluate their procedures involving the evaluation of long term investment opportunities. You have agreed to provide a detailed report illustrating the use of several techniques for evaluating capital projects including the weighted average cost of capital to the firm, the anticipated cash flows for the projects, and the methods used for project selection. In addition, you have been asked to evaluate two projects, incorporating risk into the calculations.
You have also agreed to provide an 8-10 page report, in good form, with detailed explanation of your methodology, findings, and recommendations.
Company Information
Wheel Industries is considering a three-year expansion project, Project A. The project requires an initial investment of $1.5 million. The project will use the straight-line depreciation method. The project has no salvage value. It is estimated that the project will generate additional revenues of $1.2 million per year before tax and has additional annual costs of $600,000. The Marginal Tax rate is 35%.
Required:
A. Wheel has just paid a dividend of $2.50 per share. The dividends are expected to grow at a constant rate of six percent per year forever. If the stock is currently selling for $50 per share with a 10% flotation cost, what is the cost of new equity for the firm? What are the advantages and disadvantages of using this type of financing for the firm?
B. The firm is considering using debt in its capital structure. If the market rate of 5% is appropriate for debt of this kind, what is the after tax cost of debt for the company? What are the advantages and disadvantages of using this type of financing for the firm?
C. The firm has decided on a capital structure consisting of 30% debt and 70% new common stock. Calculate the WACC and explain how it is used in the capital budgeting process.
D. Calculate the after tax cash flows for the project for each year. Explain the methods used in your calculations.
E. If the discount rate were 6 percent calculate the NPV of the project. Is this an economically acceptable project to undertake? Why or why not?
F. Now calculate the IRR for the project. Is this an acceptable project? Why or why not? Is there a conflict between your answer to part C? Explain why or why not?
Wheel has two other possible investment opportunities, which are mutually exclusive, and independent of Investment A above. Both investments will cost $120,000 and have a life of 6 years. The after tax cash flows are expected to be the same over the six year life for both projects, and the probabilities for each year’s after tax cash flow is given in the table below.
Investment B Investment C
Probability After Tax
Cash Flow Probability After Tax
Cash Flow
0.25 $20,000 0.30 $22,000
0.50 32,000 0.50 40,000
0.25 40,000 0.20 50,000
G. What is the expected value of each project’s annual after tax cash flow? Justify your answers and identify any conflicts between the IRR and the NPV and explain why these conflicts may occur.
H. Assuming that the appropriate discount rate for projects of this risk level is 8%, what is the risk-adjusted NPV for each project? Which project, if either, should be selected? Justify your conclusions.

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Instructor’s Name:

Assignment: SCIE207 Phase 5 Lab Report

Title: Taxonomy Lab to Show Organism Relationships

Instructions: You will need to fill out the data table and answer a set of questions.

When your lab report is complete, post it in Submitted Assignment files.

Part 1: Using the lab animation, fill in the following data tables to help you answer the questions that follow:

Table 1: Samples 1–5

Table 2: Samples 6–10

Common Feature

Nutrition

How does the organism break down and absorb food?

Circulatory System (Transport)

How does the organism get what it needs to cells (open, closed, diffusion only)?

Respiratory System

How does the organism get oxygen and release carbon dioxide?

Reproductive System

Does the organism use asexual or sexual reproduction (eggs, seeds, spores, placenta, type of fertilization)?

Excretory System

How does the organism get rid of wastes and maintain an ionic balance of fluids?

Growth and Development

Does the organism go through metamorphosis, develop in an egg or uterus, or grow from seeds?

Regulation

How does the organism control body processes (hormones, nervous system)?

Sample organism

Part 2: Using the completed data table, answer the following questions:

1. What is common among all samples?

2. What is common among organisms from samples 1, 9, and 10?

3. What is common between the circulatory system of organisms from samples 5, 6, and 7, but different in organisms from sample 4?

4. What is common in the respiration system of organisms from samples 2 and 4?

5. What gas is delivered to the respiratory system of organisms from samples 1, 9, and 10? Why?

6. Which organisms are producers?

7. Which organisms are decomposers?

8. Look at the surface of your hand. You will see the skin and hair made up of protein called keratin. Which organisms did humans inherit that protein from?

9. Which organisms have blood?