PROBLEM 8-1
Given
Sale price
Square footage
Selling price/sq ft
Time on the market
Comp #1
$240,000.00
2,240
$107.14
61 days
Solution Legend
Comp #2
2121 Tartar Circle
$265,000.00
3,000
2,145
$123.54
32 days
Solution
a.
Average price per square foot
Estim
PROBLEM 7-2
Given
Tax rate
Cost of Capital
30.00%
15.00%
Year
2011
$2,400,000
(2,000,000)
$400,000
(120,000)
$280,000
2010
EBITDA
Less: Depreciation
EBIT
Less: Tax
Net Income
Investment
2012
$2,400,000
(2,000,000)
$400,000
(120,000)
$280,000
2013
$4,250,0
PROBLEM 6-1
Cash provided by operations (CPBO)differs from free cash flow for the following reasons:
1. CPBO is measured after subtracting after-tax interest expense.
2. CPBO includes after-tax nonoperating or other income.
3. CPBO excludes consideration
PROBLEM 5-1
One should use expected cash flows rather than optimistic cash flows and discount these cash
flows at the appropriate risk-adjusted discount rate. This is the procedure that is theoretically
correct. In practice, mangers often hike up the disc
PROBLEM 3-1: Clayton Manufacturing Company
Given
EBITDA (Year 1)
Growth Rate in EBITDA
Initial investment
Depreciation (Straight line) over
Estimated salvage value
Tax rate
Cost of capital
Solution Legend
$200,000
5%
$800,000
5 years
$35%
12%
= Value give
PROBLEM 2-2
Solution Legend
= Value given in problem
= Formula/Calculation/Analysis required
= Qualitative analysis or Short answer required
= Goal Seek or Solver cell
= Crystal Ball Input
= Crystal Ball Output
Given
a.
Initialinvestment
$4,000,000.00
Ann