Atlas Metal Company

1478 words 6 pages
ATLAS METAL COMPANY CASE
Executive Summary
The purpose of this report is to help a financial special assistant, Linda, to analyze the financial position of Atlas Metals Company and deciding its capital budgeting and capital structure. Firstly, I explain why firm should use Net Present Value (NPV) methods for capital budgeting rather than Return on Investment (ROI) method and Payback Period method. Secondly, I calculate the Weighted Average Cost of Capital (WACC) which will be used as discount rate while calculating NPV. Then, I decide which rapid prototyping system company should invest as well as I compare the each expansion projects’ IRR with WACC to decide which projects should be invested and which should not. After deciding
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So the cost of preferred stock is $12.69/100: 12.69%
Market Value of Preferred Stock: $36,010,000
Finally we have total value of $113,539,297+ $29,010,000 + $211,140,000 + $36,010,000 = $389,699,000
WACC= WST *RST(1-T)+ WLT*RLT(1-T)+ WCRC+ WPRP
( where the notation WST weigh of short term debt, RST cost of short term debt , WLT: weight of long term debt , RLT : cost of long term debt, WC: weigh of common stock, RC: cost of common stock, WP: is weight of preferred stock and RP: is cost of preferred stock)
WACC = 11.05%
Which Rapid Prototyping System

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