Chapter_17

# Chapter_17 - Chapter 17 Problems 1-17 Input boxes in tan...

This preview shows pages 1–8. Sign up to view the full content.

Chapter 17 Problems 1-17 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."

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
k"
Chapter 17 Question 1 Input Area: EBTD \$120,000 Years for project 5 Tax rate 35% Unlevered cost of equity 10% Purchase price \$375,000 Debt issue amount \$250,000 Cost of debt 8% Output Area: a. Aftertax earnings \$78,000.00 PV of aftertax earnings \$295,681.37 Price factor 0.7346 Maximum price to pay \$402,482.01 b. NPV (All-equity) \$20,189.52 NPV (Financing effects) \$27,948.97 APV \$48,138.49

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Chapter 17 Question 2 Input Area: Investment \$2,400,000 Years for project 4 EBTD \$850,000 Cost of debt 9.50% Floatation costs \$24,000 Unlevered cost of equity 13% Tax rate 30% Output Area: NPV (All-equity) \$(94,784.72) NPV (Financing effects) \$200,954.57 APV \$106,169.85
Chapter 17 Question 3 Input Area: Number of restaurants 3 Debt-equity ratio 0.40 Interest payments/store \$29,500 Levered cost of equity 19% Annual sales/store \$1,000,000 COGS/store \$450,000 \$325,000 Tax rate 40% Output Area: a. Sales \$3,000,000 COGS 1,350,000 975,000 Interest 88,500 EBT \$586,500 Taxes 234,600 NI \$351,900 Value of equity \$1,852,105.26 b. Value of debt \$740,842.11 Value of company \$2,592,947.37

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Chapter 17 Question 4 Input Area: All-equity beta 1.10 Target debt-equity 0.40 Market expected return 13% Risk-free rate 7% Current date 1/1/2006 Bond maturity date 1/1/2026 Coupon rate 9.00% Bond price \$975.00 Coupons per year 2 Tax rate 34% Output Area: a. Yield to maturity 9.28% b. Unlevered cost of equity 13.60% Levered cost of equity 14.74% c. Debt-value ratio 0.29 Equity-value ratio 0.71 WACC 12.28%
Chapter 17 Question 5 Input Area: Beta 1.25 North Pole South Pole Debt \$1,400,000 \$2,600,000 Equity \$2,600,000 \$1,400,000 Market expected return

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

## 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.

### Page1 / 19

Chapter_17 - Chapter 17 Problems 1-17 Input boxes in tan...

This preview shows document pages 1 - 8. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online