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Structured Finance Week6

# Structured Finance Week6 - V op = 400,000 1 0.05(0.12 –...

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Structured Finance Homework number 6

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12-1 AFN Equation 1. Data: Capital intensity ratio = A/S 0 = \$3,000,000 / \$5,000,000 = 0.6 Spontaneous liabilities ratio = L 0 */S 0 : = 500,000 / \$5,000,000 = 0.1 Profit Margin M = 5% = 0.05 L –liabilities = 1,000,000 ΔS = \$1,000,000 S 1 = \$6,000,000 A = \$3,000,000 POR = 70% = 0.7 2. Calculations: AFN = 0.6*1,000,000 – 0.1 * 1,000,000 – 0.05* \$6,000,000 * (1-0.7) = \$410,000 AFN = \$500,000 – 90,000 = \$410,000.
VALUE OF OPERATIONS V op OF CONSTANT GROWTH 13-2 (Value of Operations) 1. Data: EBIT = \$400,000 g =5% = 0.05 WACC = 12% = 0.12 V op = ? 2. Calculations:

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Unformatted text preview: V op = 400,000 ( 1 +0.05) / (0.12 – 0.07) = 6,000,000 HORIZON VALUE 13-3 Horizon Value 2. Calculations: g = (707.55 – 667.5) / 667.55 = 0.06 = 6% HV = 707.55 * (1 + 0.06) / (0.11 – 0.06) = \$15,000 (in millions of dollars) 13-4 EROIC 1. Data: WACC = 10% = 0.1 Capital = \$200 million EROIC -= 9% g = 5% V op = ? MVA = ? 2. Calculations: V op = 200,000,000 + [200,000,000*(0.09 - 0.1)/(0.1 – 0.05)] = \$200,000,000 – \$40,000,000 = \$ 160,000,000. MVA t = 200,000,000 * (0.09 – 0.1) / (0.1 – 0.05) = - 40,000,000...
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Structured Finance Week6 - V op = 400,000 1 0.05(0.12 –...

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