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MasterExam2C - Please use the DESIGNATED ANSWER SHEETS for...

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Please use the DESIGNATED ANSWER SHEETS for your answers Do NOT copy over or delete the grading area on top of the answer Be make sure to link your answers in a way that makes it easy to gr ALL Calculations MUST BE SHOWN. No credit for answer only. Please link to the relevant information from a previous question if ap Tab Type Points Each Points Available Q1 2.5 Q2 2.5 Q3 2.5 Q4 2.5 Q5 2.5 Q6 2.5 Q7 2.5 Q8 2.5 Q9 2.5 Q10 2.5 Total 25 Please work in order of YOUR strength to maximize your po Please DO ALL CALCULATIONS IN EXCEL. SHOW ALL F ANSWER ONLY ON THE DESIGNATED SHEETS for each
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s. They link to this summary. sheet. rade. Every question is worth 2.5 points. pplicable. Points Earned 0.0Name 0.0ID 0.0 BEFORE STARTING SAVE THE EXAM AS FirstNameLastNam 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 Please have mercy ; ) oints. FORMULAS, LINKS h question.
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Question 1 Question 2 Question 3 Using the same information, what is the Net Present Value and should they go ahead? Question 4 Question 5 Question 6 Question 7 Question 8 Do NOT Answer on This Sheet. Use the designated Answer Sheets ONLY as that will assist in grading and ensure grading equity. BEFORE you get started, save this exam as your First Name and Last Name The CEO of Bloggers Inc. has asked you to evaluate the proposed acquisition of a new computer. The computer's price is $45,000, and it falls into the MACRS 3-year class. Purchase of the computer would require an increase in net operating working capital of $1,000. The computer would increase the firm's Gross Profit by $20,000 per year but would also increase operating costs by $5,000 per year. The computer is expected to be used for 3 years and then be sold for $25,000. The firm's marginal tax rate is 40 percent, and the project's cost of capital is 14 percent. What is the initial investment? Using the same information, what is the operating cash flow in year 2? And what is the total value of the terminal year non-operating cash flows at the end of year 3? Using the included financials, and using history as source of assumptions, forecast the NEEDED financial statement items ONLY for 3 years and determine the Annual Free Cash Flows for your assigned company. Spell out your assumptions. Determine the Horizon Value for your assigned company (Link to previous question). If your FCF is negative use a valuation multiple from Yahoo Statistics (last tab) Determine the Value of operations for your assigned company. And the value of equity and Market Value added. Sierra Entertainment, Inc. is considering an acquisition of Valley Shows Company. Sierra expects Valley’s NOPAT to be of $9 million the first year with all depreciation cash flows reinvested to replace equipment and zero interest expense. For the second year, Valley is expected to have NOPAT of $25 million and interest expense of $5 million. Also, in the second year only, Valley will require net reinvestment of an additional $10 million to finance future growth. Valley's applicable marginal tax rate is 40 percent. After the second year, the free cash flows from Valley to Sierra will grow at a constant rate of 4 percent. The firm has determined that Valley’s cost of equity is 17.5 percent and has estimated
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