Chapter_16

Chapter_16 - Chapter 16 Problems 1-10 Input boxes in tan...

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Chapter 16 Problems 1-10 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 16 Question 1 Input Area: EBIT $750,000 Unlevered cost of equity 15% Corporate tax rate 35% Market value of debt $1,500,000 Output Area: a. $3,775,000.00 b. The CFO may be correct. The value calculated in part a does not include the costs of any non-marketed claims, such as bankruptcy or agency costs. V L
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Chapter 16 Question 2 Input Area: Current company value $3,000,000 EBIT (40 hour week) $500,000 EBIT (50 hour week) $600,000 New capital $2,000,000 Interest rate on debt 9% Output Area: a. Debt issue: Cash flow Interest Cash flow to equity Cash flow to Tom 40 hour week $500,000 $180,000 $320,000 $320,000 50 hour week $600,000 $180,000 $420,000 $420,000 Equity issue: Tom's equity ownership 60% Cash flow Interest Cash flow to equity Cash flow to Tom 40 hour week $500,000 $- $500,000 $300,000 50 hour week $600,000 $- $600,000 $360,000
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Chapter 16 Question 3 Input Area: Amount of debt $80,000 Debt interest rate 12% EBIT $9,600 b. Growth rate 5% c. Growth rate 10% Output Area: a. Interest payment $9,600.00 Earnings available to
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Chapter_16 - Chapter 16 Problems 1-10 Input boxes in tan...

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