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Chapter 17
Odd Problems
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 Addin" be installed in Excel.
To install these, click on "ToolsAddIns" and select "Analysis ToolPak"
and "Solver AddIn."
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Question 1
Input Area:
EBIT
$850,000
Unlevered cost of equity
14%
Corporate tax rate
35%
Market value of debt
$1,900,000
Output Area:
a.
$4,611,428.57
b.
The CFO may be correct. The value calculated in
part a does not include the costs of any
nonmarketed claims, such as bankruptcy or
agency costs.
V
L
Question 3
Input Area:
Amount of debt
$70,000
Debt interest rate
8%
EBIT
$5,600
b.
Growth rate
3%
c.
Growth rate
7%
Output Area:
a.
Interest payment
$5,600.00
Earnings available to
shareholders
$
Value of equity
$
D/V ratio
1.000
b.
Earnings next year
$5,768.00
Earnings available to
shareholders
$168.00
Value of equity
$3,360.00
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This note was uploaded on 03/12/2012 for the course FIN 610 taught by Professor Khawaja during the Spring '08 term at University of Maryland Baltimore.
 Spring '08
 Khawaja

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