WACC and Shareholders Wealth

WACC and Shareholders Wealth - 0.58 20000 81600 0.82 7000...

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Debt 40000 20% Interest 10% Equity 100000 80% Tax 0.4 Assets 200000 Demand for Pre-Tax Taxes Product Pr Probability EBIT Interest Income -0.4 Terrible 0.05 -60000 4000 -64000 -25600 Poor 0.2 -20000 4000 -24000 -9600 Normal 0.5 40000 4000 36000 14400 Good 0.2 100000 4000 96000 38400 Wonderful 0.05 140000 4000 136000 54400 Expected value: Standard deviation: Coef cient of variation: f FCF Percent Market After-Tax Financed Debt/Equity, Cost of Debt, Estimated Cost of with Debt, wd D/S (1 T) rd Beta, b Equity, rs WACC 0 0 0.05 1 0.12 0.12 0.1 11.11 4.8 1.07 12.4 0.12 0.2 25 4.86 1.15 12.9 0.11 0.3 42.86 5.1 1.26 13.5 0.11 0.4 66.67 5.4 1.4 14.4 0.11 0.5 100 6.6 1.6 15.6 0.11 0.6 150 8.4 1.9 17.4 0.12
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Net Income ROE Expected EBIT -38400 -0.38 -3000 -14400 -0.14 -4000 21600 0.22 20000 57600
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Unformatted text preview: 0.58 20000 81600 0.82 7000 40000 0.3 1.65 $24,000.00 Value of Firm Cash Flow V 24000 200000 24000 206186 24000 212578 24000 217984 24000 222222 24000 216216 24000 200000 Percent Market After-Tax Financed Debt/Equity, Cost of Debt, Estimated Cost of with Debt, wd D/S (1 T) rd Beta, b Equity, rs WACC 0.05 1 0.12 0.12 10 11.11 4.8 1.07 12.4 11.64 20 25 4.86 1.15 12.9 11.29 30 42.86 5.1 1.26 13.5 11.01 40 66.67 5.4 1.4 14.4 10.8 50 100 6.6 1.6 15.6 11.1 60 150 8.4 1.9 17.4 12 Value of Firm, V 200000 206186 212540 217984 222222 216216 200000...
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WACC and Shareholders Wealth - 0.58 20000 81600 0.82 7000...

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