pvtdiscrate - 10000 (Add back only long term interest...

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Inputs Equity Unlevered beta for business = 1.02 Do you want to add a "private company premium"(P) or use a "tot T If private company premium, enter the premium(in %) here 10% If total beta, enter correlation with market = 45% Riskfree Rate = 6% Risk Premium = 5.50% Debt Do you want to estimate a synthetic cost of debt? N Pre-tax Cost of Debt = 7% Tax Rate = 40% Debt Ratio Do you want to use the industry average debt to capital ratio? Y If yes, enter the industry average market debt to capital ratio = 15% If not, enter the target debt ratio for the private firm = Output Debt to capital ratio for private firm = 15.00% Total beta for firm = 2.51 Equity Debt Capital Weight in Cost of Capital 85.00% 15.00% 100.00% Cost of Component 19.79% 4.20% 17.45%
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Inputs for synthetic rating estimation Please read the special cases worksheet (see below) before you use this spreadsheet. Enter current Earnings before interest and taxes (EBIT) =
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Unformatted text preview: 10000 (Add back only long term interest expense for financial firms) Enter current interest expenses = 2500 (Use only long term interest expense for financial firms) Enter current long term government bond rate = 6.00% Output Interest coverage ratio = 4.00 Estimated Bond Rating = BBB Estimated Default Spread = 2.25% Estimated Cost of Debt = 8.25% Ratings table If interest coverage ratio is greater than to Rating is Spread is-100000 0.499999 D 14.00% 0.5 0.799999 C 12.70% 0.8 1.249999 CC 11.50% 1.25 1.499999 CCC 10.00% 1.5 1.999999 B-8.00% 2 2.499999 B 6.50% 2.5 2.999999 B+ 4.75% 3 3.499999 BB 3.50% 3.5 4.499999 BBB 2.25% 4.5 5.999999 A-2.00% 6 7.499999 A 1.80% 7.5 9.499999 A+ 1.50% 9.5 12.499999 AA 1.00% 12.5 100000 AAA 0.75%...
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This note was uploaded on 01/29/2012 for the course FIN 6000 taught by Professor Banko during the Fall '11 term at University of Florida.

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pvtdiscrate - 10000 (Add back only long term interest...

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