| USE INFO FROM GENERAL MILLS 10k |
| The firm is looking to expand its operations by 10% of the firm's net property, plant, and equipment. (Calculate this amount by taking 10% of the property, plant, and equipment figure that appears on the firm's balance sheet.) | 4,056.47 |
| The estimated life of this new property, plant, and equipment will be 12 years. The salvage value of the equipment will be 5% of the property, plant and equipment's cost. | 18.44 |
| The annual EBIT for this new project will be 18% of the project's cost. | 66.38 |
| The company will use the straight-line method to depreciate this equipment. Also assume that there will be no increases in net working capital each year. Use 35% as the tax rate in this project. | 5596.4 |
| The hurdle rate for this project will be the WACC that you are able to find on a financial website, such as Gurufocus.com. If you are unable to find the WACC for a company, contact your instructor. He or she will assign you a WACC rate. | 6.30% |
| Your calculations for the amount of property, plant, and equipment and the annual depreciation for the project |
| Your calculations that convert the project's EBIT to free cash flow for the 12 years of the project. operating cash flow EBIT (1-t) + Depreciation and Non-cash expenses
FCF = Operating Cash Flow – Capital Expenditure – Net Working Capital
Capex for a year = PPEcurrent year – PPEprevious year + Depreciation & Amortization
Net working capital = Working CapitalCurrent year – Working Capitalprevious year
| 72.34116667 | -55.90 |
| The following capital budgeting results for the project |
| Net present value |
| Internal rate of return |
| Discounted payback period. |
| Your discussion of the results that you calculated above, including a recommendation for acceptance or rejection of the project |
| Once again, you may embed your Excel spreadsheets into your document. Be sure to follow APA standards for this project. |
Financeil
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