answer key - Option A 20 annual return forever Revenue COGS...

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Option A - 20% annual return forever 0 1 2 3 4 5 6 7 8 Revenue $0.00 $0.00 $0.00 $400,000.00 $400,000.00 $400,000.00 $400,000.00 $400,000.00 $400,000.00 COGS $0.00 $0.00 $0.00 $100,000.00 $100,000.00 $100,000.00 $100,000.00 $100,000.00 $100,000.00 WACC Gross Profit $0.00 $0.00 $0.00 $300,000.00 $300,000.00 $300,000.00 $300,000.00 $300,000.00 $300,000.00 Value Weight Cost Wt x Cost Operating Expenses $0.00 $0.00 $0.00 $80,000.00 $80,000.00 $80,000.00 $80,000.00 $80,000.00 $80,000.00 You 500000 0.6849315068 0.15 0.102739726 Depreciation Expenses $0.00 $0.00 $0.00 $50,000.00 $50,000.00 $50,000.00 $50,000.00 $0.00 $0.00 Investor 230000 0.3150684932 0.2 0.0630136986 EBT $0.00 $0.00 $0.00 $170,000.00 $170,000.00 $170,000.00 $170,000.00 $220,000.00 $220,000.00 730000 1 0.1657534247 Taxes $0.00 $0.00 $0.00 $51,000.00 $51,000.00 $51,000.00 $51,000.00 $66,000.00 $66,000.00 NI $0.00 $0.00 $0.00 $119,000.00 $119,000.00 $119,000.00 $119,000.00 $154,000.00 $154,000.00 Depreciation Expenses $0.00 $0.00 $0.00 $50,000.00 $50,000.00 $50,000.00 $50,000.00 $0.00 $0.00 CFO $0.00 $0.00 $0.00 $169,000.00 $169,000.00 $169,000.00 $169,000.00 $154,000.00 $154,000.00 Chg. In NWC $30,000.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Capital Spending $700,000.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 FCF -$730,000.00 $0.00 $0.00 $169,000.00 $169,000.00 $169,000.00 $169,000.00 $154,000.00 $154,000.00 $929,090.91 PV of FCF -$730,000.00 $0.00 $0.00 $106,675.97 $91,508.18 $78,497.03 $67,335.87 $370,184.31 Total Value ==========> -$15,798.64 Option B - Dividend 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Revenue $0.00 $0.00 $0.00 $400,000.00 $400,000.00 $400,000.00 $400,000.00 $400,000.00 $400,000.00 $400,000.00 $400,000.00 $400,000.00 $400,000.00 $400,000.00 $400,000.00 $400,000.00 $400,000.00 COGS $0.00 $0.00 $0.00 $100,000.00 $100,000.00 $100,000.00 $100,000.00 $100,000.00 $100,000.00 $100,000.00 $100,000.00 $100,000.00 $100,000.00 $100,000.00 $100,000.00 $100,000.00 $100,000.00 Gross Profit $0.00 $0.00 $0.00 $300,000.00 $300,000.00 $300,000.00 $300,000.00 $300,000.00 $300,000.00 $300,000.00 $300,000.00 $300,000.00 $300,000.00 $300,000.00 $300,000.00 $300,000.00 $300,000.00 Operating Expenses $0.00 $0.00 $0.00 $80,000.00 $80,000.00 $80,000.00 $80,000.00 $80,000.00 $80,000.00 $80,000.00 $80,000.00 $80,000.00 $80,000.00 $80,000.00 $80,000.00 $80,000.00 $80,000.00 Depreciation Expenses $0.00 $0.00 $0.00 $50,000.00 $50,000.00 $50,000.00 $50,000.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 EBT $0.00 $0.00 $0.00 $170,000.00 $170,000.00 $170,000.00 $170,000.00 $220,000.00 $220,000.00 $220,000.00 $220,000.00 $220,000.00 $220,000.00 $220,000.00 $220,000.00 $220,000.00 $220,000.00 Taxes $0.00 $0.00 $0.00 $51,000.00 $51,000.00 $51,000.00 $51,000.00 $66,000.00 $66,000.00 $66,000.00 $66,000.00 $66,000.00 $66,000.00 $66,000.00 $66,000.00 $66,000.00 $66,000.00 NI $0.00 $0.00 $0.00 $119,000.00 $119,000.00 $119,000.00 $119,000.00 $154,000.00 $154,000.00 $154,000.00 $154,000.00 $154,000.00 $154,000.00 $154,000.00 $154,000.00 $154,000.00 $154,000.00 Depreciation Expenses $0.00 $0.00 $0.00 $50,000.00 $50,000.00 $50,000.00 $50,000.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 CFO $0.00 $0.00 $0.00 $169,000.00 $169,000.00 $169,000.00 $169,000.00 $154,000.00 $154,000.00 $154,000.00 $154,000.00 $154,000.00 $154,000.00 $154,000.00 $154,000.00 $154,000.00 $154,000.00 Chg. In NWC $30,000.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Capital Spending $700,000.00 $0.00 $0.00 $42,250.00 $42,250.00 $42,250.00 $42,250.00 $38,500.00 $38,500.00 $38,500.00 $38,500.00 $38,500.00 $38,500.00 $38,500.00 $21,500.00 $0.00 $0.00 FCF -$730,000.00 $0.00 $0.00 $126,750.00 $126,750.00 $126,750.00 $126,750.00 $115,500.00 $115,500.00 $115,500.00 $115,500.00 $115,500.00 $115,500.00 $115,500.00 $132,500.00 $154,000.00 $154,000.00 $1,026,666.67 PV of FCF -$730,000.00 $0.00 $0.00 $83,340.18 $72,469.72 $63,017.15 $54,797.52 $43,420.73 $37,757.15 $32,832.31
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