Capital Investment Dilemma: Thermowell Machines and WACC Analysis

You must construct an analysis of Burton Sensors, Inc. In your analysis, you should address answers to the following questions:

1. Should Marshall continue to pursue a high-growth strategy? How can she finance it? What is the potential effect of growth on Burton's stock price?

2. Should Marshall purchase the thermowell machines? In calculating the weighted-average cost of capital, use 5.8% as the equity risk premium.

3. Should Marshall accept the offer of the private investor and issue new equity? How does the deal affect Burton's existing shareholders? What is the effect of the issuance on Burton's balance sheets?

4. Should Marshall acquire Electro-Engineering, Inc. (EE)? What is the most important consideration? Even if the NPV of the acquisition is zero, should she still proceed?

5. Does the acquisition allow EE to gain enough funding to invest in the purchase of thermowell machines? Your report should not exceed more than 5 pages, but appendices can be attached with supporting tables presenting your analysis. Your report must be self-contained, answering each question with reference to your supporting tables in the appendix.