Projecting your firm’s future performance

B. Projecting your firm’s future performance

(ii) Perform appropriate sensitivity analysis and alternate scenario, by varying the growth rate in sales and key expense variables

C. Cost of Capital

(i) Compute the cost of equity for your firm (use CAPM; Assume the risk free rate is 4% and the market risk premium is 5%; obtain beta from finance websites)

(ii) Compute the after tax cost of debt (assume tax rate of 40%)

(iii) Compute the weighted average cost of capital using book value of debt and market value of the equity.

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