BUS 657 Week 3 Chapter 9 Minicase Cost of Capital and Project Risk
Download Chapter 9 Mini Case: Cost of Capital and Project Risk. Read the mini-case on page 349 of your text and answer the following questions:
1. Determine the current weighted average cost of capital for CWC. 2. Determine the appropriate discount rate for the healthy bottle water project. 3. Should the firm undertake the healthy bottled water project? As part of your analysis, include a sensitivity analysis for sales price, variable costs, fixed costs, and unit sales at +/- 10%, 20%, and 30% from the base case. Also perform an analysis of the following two scenarios: Best case: Selling 2,500,000 units at a price of $1.24 each, with variable production costs of $0.22 per unit. Worst case: Selling 950,000 units at a price of $1.32 per unit, with variable production costs of $0.27 per unit.