Attached is the spreadsheet we are supposed to complete.
However, I ran into a snag. My pretend company sells its beer in six-packs and kegs. Since there is a mixture, I am unsure how to calculate the break-even for the sales and the volume.
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Estimation for Demand
Population in Philadelphia Proper 1,500,000 (Per Census Bureau)
50% are between 25 - 45 750,000 (Per Census Bureau)
25% are craft beer drinkers 187,500 (Assumption)
50% of the craft beer drinkers buy 1 six-pack 93,750 (Assumption)
Number of pubs in Philadelphia Proper Area 53 (Not affiliated with a brewery)
50% agree to carry Olde Towne craft beer 27 (Estimation)
Assume the turnover is one keg 2 times per month 648 kegs (Estimated)
Number of six-packs sold at the brewery 5,200 (Estimated, could be low)
Number of kegs sold at the brewery 200 (Estimated, could be ...
The solution examines pricing projects and the weighted average price.
In what sense is the WACC an average cost?
Question 1: In what sense is the WACC an average cost? A marginal cost?
Question 2: A company's 6% coupon rate, semiannual payment, $100 par value bond that matures in 30 years sells at a price of $515.16. The company's federal-plus-state tax rate is 40%. What is the firm's component cost of debt for purposes of calculating the WACC? (hint: Base your answer on the minimal rate.) Please provide your solution with the steps. Financial calculator should be used.
Question 3: Explain why the NPV of a relatively long-term project, defined as one for which a high percentage of its cash flows are expected in the distant future, is more sensitive to changes in the cost of capital than is the NPV of a short-term project.
Question 4: A project has an initial cost of $52, 125, expected net cash inflows of $12,000 per year for 8 years, and a cost of capital of 12%. What is the project's NPV?View Full Posting Details