Question 3:Juhayna Food Industries is attempting to select the best of three mutually exclusive projects.The initial investment and after-tax cash inflows associated with these projects are shown in the following table.Cash flowProject AProject BProject CInitial Investment100000120,000130,000Year 1 Cash Inflows 3000036,50038000Year 2 cash inflows350004500020000Year 3 cash inflows400004000042000Year 4 cash inflows380003500045000Year 5 cash inflows200003000050000 Taking into consideration that the cost of debt 7% , cost of preferred stock 12% and cost of new common stock 15%. The weight of each source of capital are long term debt 30% , preferred stock 20% and common stock equity 50%. TO dOCreate a spreadsheet to answer the following questions:Calculate the firm‘s cost of capital ( WACC)Calculate the payback period for each project.Calculate the net present value (NPV) of each project,Calculate the internal rate of return (IRR) for each project.Discuss any conflict in ranking that may exist between NPV and IRR.Summarize the preferences dictated by each measure, and indicate which project you would recommend. Explain why T 93.pdf - Adobe ReaderFile Edit View Window HelpOpen125%ToolsF& SignCommentSign in- Export POFQuestion 3:Adobe ExportPDFConvent POF filei to Word or ExcelanlineJuhayna Food Industries is attempting to select the best of three mutually exclusive projects.Selet POF Filet alodThe initial investment and after-tax cash inflows associated with these projects are shown in thefollowing table.1e/250 KSConvert Ta:Microsoft Word ("doo)Cash flowProject A100000| Project B120.000Project C130.000Initial InvestmentRecognice lest in Englahu.s)ChangeYear 1 Cash Inflows 30000Year 2 cash inflows 35000Year 3 cash inflows 40000Year 4 cash inflows 38000Year 5 cash inflows 20000Taking into consideration that the cost of debt 7%, cost of preferred stock 12% and cost of newcommon stock 15%. The weight of each source of capital are long tem debt 30% . preferedstock 20% and common stock equity 50%.36.50045000380002000042000Convert400003500045000• Create PDF3000050000ト Edit PDF.• Combine PDFSend Files• Store FilesTO doCreate a spreadsheet to answer the following questions:a) Calculate the fim's cost of capital ( WACC)b) Calculate the payback period for each project.c) Calculate the net present value (NPV) of each project,d) Calculate the internal rate of retum (IRR) for each project.e) Discuss any conflict in ranking that may exist between NPV and IRR.) Summarize the preferences dictated by each measure, and indicate which project youwould recommend. Explain whyA6XG A 00 O ENG 1250 AM

1. Calculate the firm‘s cost of capital ( WACC): Therefore, the firm's cost of capital (WACC) is…

Answered: Juhayna Food Industries is attempting…

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter2: Financial Statements, Cash Flow,and Taxes

Section: Chapter Questions

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Question 3:

Juhayna Food Industries is attempting to select the best of three mutually exclusive projects.

The initial investment and after-tax cash inflows associated with these projects are shown in the following table.

Cash flow	Project A	Project B	Project C
Initial Investment	100000	120,000	130,000
Year 1 Cash Inflows	30000	36,500	38000
Year 2 cash inflows	35000	45000	20000
Year 3 cash inflows	40000	40000	42000
Year 4 cash inflows	38000	35000	45000
Year 5 cash inflows	20000	30000	50000

Taking into consideration that the cost of debt 7% , cost of preferred stock 12% and cost of new common stock 15%. The weight of each source of capital are long term debt 30% , preferred stock 20% and common stock equity 50%.

TO dO

Create a spreadsheet to answer the following questions:

Calculate the firm‘s cost of capital ( WACC)
Calculate the payback period for each project.
Calculate the net present value (NPV) of each project,
Calculate the internal rate of return (IRR) for each project.
Discuss any conflict in ranking that may exist between NPV and IRR.
Summarize the preferences dictated by each measure, and indicate which project you would recommend. Explain why

T 93.pdf - Adobe Reader
File Edit View Window Help
Open
125%
Tools
F& Sign
Comment
Sign in
- Export POF
Question 3:
Adobe ExportPDF
Convent POF filei to Word or Excel
anline
Juhayna Food Industries is attempting to select the best of three mutually exclusive projects.
Selet POF File
t alod
The initial investment and after-tax cash inflows associated with these projects are shown in the
following table.
1e/250 KS
Convert Ta:
Microsoft Word ("doo)
Cash flow
Project A
100000
| Project B
120.000
Project C
130.000
Initial Investment
Recognice lest in Englahu.s)
Change
Year 1 Cash Inflows 30000
Year 2 cash inflows 35000
Year 3 cash inflows 40000
Year 4 cash inflows 38000
Year 5 cash inflows 20000
Taking into consideration that the cost of debt 7%, cost of preferred stock 12% and cost of new
common stock 15%. The weight of each source of capital are long tem debt 30% . prefered
stock 20% and common stock equity 50%.
36.500
45000
38000
20000
42000
Convert
40000
35000
45000
• Create PDF
30000
50000
ト Edit PDF.
• Combine PDF
Send Files
• Store Files
TO do
Create a spreadsheet to answer the following questions:
a) Calculate the fim's cost of capital ( WACC)
b) Calculate the payback period for each project.
c) Calculate the net present value (NPV) of each project,
d) Calculate the internal rate of retum (IRR) for each project.
e) Discuss any conflict in ranking that may exist between NPV and IRR.
) Summarize the preferences dictated by each measure, and indicate which project you
would recommend. Explain why
A6XG A 00 O ENG 1250 AM

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