I am having trouble figuring out the correct WACC and expected cash flow for this case study.
The firm’s target debt to capital ratio is 18%. I need to estimate the firm’s WACC using 9.25% for effective cost of debt. Then model the expected cash flows for the new product investment opportunity and value this opportunity at the WACC.
NOTE: I have attached a pdf that gives financial information on the firm’s competitors since it is a private company and has no beta. I am also attaching my forecasted financial statements given the two scenarios: not investing and investing.
I am having trouble figuring out the correct WACC and expected cash flow for this case study.
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