Chapter_15

# Chapter_15 - Chapter 15 Problems 1-30 Input boxes in tan...

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Chapter 15 Problems 1-30 Input boxes in tan Output boxes in yellow Given data in blue Calculations in red Answers in green NOTE: Some functions used in these spreadsheets may require that the "Analysis ToolPak" or "Solver Add-in" be installed in Excel. To install these, click on "Tools|Add-Ins" and select "Analysis ToolPak and "Solver Add-In."

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Chapter 15 Question 1 Input Area: Market value \$150,000 EBIT \$14,000 Debt issue \$60,000 Interest rate 5% Shares outstanding 2,500 Expansion-EBIT 30% Recession-EBIT 60% Output Area: No debt EBIT \$5,600 \$14,000 \$18,200 Interest \$- \$- \$- NI \$5,600 \$14,000 \$18,200 EPS \$2.24 \$5.60 \$7.28 Change EPS% -60.00% 0.00% 30.00% With debt Share price = \$60.00 Shares repurchased = 1,000.00 EBIT \$5,600 \$14,000 \$18,200 Interest \$3,000 ### \$3,000 ### \$3,000 NI \$2,600 \$11,000 \$15,200 EPS \$1.73 \$7.33 \$10.13 Change EPS% -76.36% 0.00% 38.18%

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Chapter 15 Question 2 Input Area: Market value \$150,000 EBIT \$14,000 Debt issue \$60,000 Interest rate 5% Shares outstanding 2,500 Expansion-EBIT 30% Recession-EBIT 60% Tax rate 35% Output Area: No debt with taxes EBIT \$5,600 \$14,000 \$18,200 Interest - - - Taxes 1,960 4,900 6,370 NI \$3,640 \$9,100 \$11,830 EPS \$1.46 \$3.64 \$4.73 Change EPS% -60.00% 0.00% 30.00% With debt and taxes Share price = \$60.00 Shares repurchased = 1,000.00 EBIT \$5,600 \$14,000 \$18,200 Interest 3,000 ### 3,000 ### 3,000 Taxes 910 3,850 5,320 NI \$1,690 \$7,150 \$9,880 EPS \$1.13 \$4.77 \$6.59 Change EPS% -76.36% 0.00% 38.18%

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Chapter 15 Question 3 Input Area: No debt TE = MV = \$150,000 With debt TE = \$90,000 Output Area: a. ROE 3.73% 9.33% 12.13% Change ROE% -60.00% 0.00% 30.00% b. ROE 2.89% 12.22% 16.89% Change ROE % -76.36% 0.00% 38.18% c. No debt No debt, ROE 2.43% 6.07% 7.89% Change ROE % -60.00% 0.00% 30.00% With debt With debt, ROE 1.88% 7.94% 10.98% Change ROE % -76.36% 0.00% 38.18%
Chapter 15 Question 4 Input Area: Plan I: Shares outstanding 150,000 Plan II: Shares outstanding 60,000 Debt outstanding \$1,500,000 Interest rate 10% a. EBIT \$200,000 b. EBIT \$700,000 Output Area: a. NI EPS Plan I \$200,000 \$1.33 Plan II \$50,000 \$0.83 b. Plan I \$700,000 \$4.67 Plan II \$550,000 \$9.17 c. Breakeven EBIT = \$250,000.00

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Chapter 15 Question 5 Input Area: Plan I: Shares outstanding 150,000 Plan II: Shares outstanding 60,000 Debt outstanding \$1,500,000 Interest rate 10% a. EBIT \$200,000 b. EBIT \$700,000 Output Area: Price \$16.67 V (I) \$2,500,000 V (II) \$2,500,000
Chapter 15 Question 6 Input Area: Plan I: Shares outstanding 1,100 Debt \$16,500 Plan II: Shares outstanding 900 Debt outstanding \$27,500 Interest rate 10% a. EBIT \$10,000 Stock outstanding 1,400 d. Tax rate 40% Output Area: a. I II All-Equity EBIT \$10,000 \$10,000 \$10,000 Interest \$1,650 \$2,750 \$- NI \$8,350 \$7,250 \$10,000 EPS \$7.59 \$8.06 \$7.14 EBIT b. Plan I vs. all equity \$7,700 Plan II vs. all equity \$7,700 c.

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## This note was uploaded on 12/14/2010 for the course FINC 311 taught by Professor Stanley,t during the Fall '08 term at Winthrop.

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Chapter_15 - Chapter 15 Problems 1-30 Input boxes in tan...

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