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 …show more content…

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