# 5-6sol - PROBLEM 5-6 a First Solve for EBIT that is...

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PROBLEM 5-6 Initial cost \$100,000,000.00 Solutio PFCF (1-30 yrs) \$8,000,000.00 = Value given in prob Book debt \$80,000,000.00 = Formula/Calculatio = Qualitative analysis Assume capex = depreciation = Goal Seek or Solve Assume perpetual cash flows = Crystal Ball Input 35.00% tax rate = Crystal Ball Output 7.00% Interest rate on debt 9.94% cost of equity EBIT \$12,307,692.31 Interest \$5,600,000.00 EBT \$6,707,692.31 Tax (35%) \$2,347,692.31 NI \$4,360,000.00 EFCF \$4,360,000.00 EBIT \$12,307,692.31 Tax on EBIT \$4,307,692.31 NOPAT \$8,000,000.00 PFCF \$8,000,000.00 Diff \$0.00 b. AFTER 30 iterations the imputed value of equity converges to the trial value of the equity Book debt WACC 1 \$80,000,000.00 \$20,000,000.00 5.63% \$142,146,410.80 2 \$80,000,000.00 \$62,146,410.80 6.91% \$115,832,776.85 3 \$80,000,000.00 \$35,832,776.85 6.22% \$128,671,310.38 4 \$80,000,000.00 \$48,671,310.38 6.59% \$121,417,692.21 5 \$80,000,000.00 \$41,417,692.21 6.39% \$125,222,602.82 6 \$80,000,000.00 \$45,222,602.82 6.50% \$123,142,620.51 7 \$80,000,000.00 \$43,142,620.51 6.44% \$124,255,068.70 8 \$80,000,000.00 \$44,255,068.70 6.47% \$123,652,974.10 9 \$80,000,000.00 \$43,652,974.10

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5-6sol - PROBLEM 5-6 a First Solve for EBIT that is...

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