Chapter_17

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

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

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