FCF 9th edition Chapter 16

# FCF 9th edition Chapter 16 - Chapter 16 Problems 1-22 Input...

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Chapter 16 Problems 1-22 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 16 Question 1 Input Area: Market value \$250,000 EBIT \$28,000 Expansion-EBIT 30% Recession-EBIT 50% Debt issue \$90,000 Interest rate 7% Shares outstanding 5,000 Output Area: No debt EBIT \$14,000 \$28,000 \$36,400 Interest \$- \$- \$- NI \$14,000 \$28,000 \$36,400 EPS \$2.80 \$5.60 \$7.28 Change EPS% -50.00% 0.00% 30.00% With debt Share price = \$50.00 Shares repurchased = 1,800.00 EBIT \$14,000 \$28,000 \$36,400 Interest \$6,300 ### \$6,300 ### \$6,300 NI \$7,700 \$21,700 \$30,100 EPS \$2.41 \$6.78 \$9.41 Change EPS% -64.52% 0.00% 38.71%
Chapter 16 Question 2 Input Area: Market value \$250,000 EBIT \$28,000 Expansion-EBIT 30% Recession-EBIT 50% Debt issue \$90,000 Interest rate 7% Shares outstanding 5,000 Tax rate 35% Output Area: No debt with taxes EBIT \$14,000 \$28,000 \$36,400 Interest - - - Taxes 4,900 9,800 12,740 NI \$9,100 \$18,200 \$23,660 EPS \$1.82 \$3.64 \$4.73 Change EPS% -50.00% 0.00% 30.00% With debt and taxes Share price = \$50.00 Shares repurchased = 1,800.00 EBIT \$14,000 \$28,000 \$36,400 Interest 6,300 ### 6,300 ### 6,300 Taxes 2,695 7,595 10,535 NI \$5,005 \$14,105 \$19,565 EPS \$1.56 \$4.41 \$6.11 Change EPS% -64.52% 0.00% 38.71%

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Chapter 16 Question 3 Input Area: No debt TE = MV = \$250,000 With debt TE = \$160,000 Output Area: a. ROE 5.60% 11.20% 14.56% Change ROE% -50.00% 0.00% 30.00% b. ROE 4.81% 13.56% 18.81% Change ROE % -64.52% 0.00% 38.71% c. No debt No debt, ROE 3.64% 7.28% 9.46% Change ROE % -50.00% 0.00% 30.00% With debt With debt, ROE 3.13% 8.82% 12.23% Change ROE % -64.52% 0.00% 38.71%
Chapter 16 Question 4 Input Area: Plan I: Shares outstanding 160,000 Plan II: Shares outstanding 80,000 Debt outstanding \$2,800,000 Interest rate 8% a. EBIT \$350,000 b. EBIT \$500,000 Output Area: a. NI EPS Plan I \$350,000 \$2.19 Plan II \$126,000 \$1.58 b. Plan I \$500,000 \$3.13 Plan II \$276,000 \$3.45 c. Breakeven EBIT = \$448,000.00

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Chapter 16 Question 5 Input Area: Plan I: Shares outstanding 160,000 Plan II: Shares outstanding 80,000 Debt outstanding \$2,800,000 Interest rate 8% a. EBIT \$350,000 b. EBIT \$500,000 Output Area: Price \$35.00 V (I) \$5,600,000.00 V (II) \$5,600,000.00
Chapter 16 Question 6 Input Area: Plan I: Shares outstanding 7,000 Debt \$160,000 Plan II: Shares outstanding 5,000 Debt outstanding \$240,000 Interest rate 10% a. EBIT \$39,000 All-equity shares 11,000 d. Tax rate 40% Output Area: a. I II All-Equity EBIT \$39,000 \$39,000 \$39,000

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## This note was uploaded on 02/09/2012 for the course BMGT 340 taught by Professor None during the Spring '11 term at Shoreline.

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FCF 9th edition Chapter 16 - Chapter 16 Problems 1-22 Input...

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