What is the value of a 10-year, 10% coupon bond if rd is 10%?
PV =
FV =
Rate =
Nper =
Pmt =
($1,000.00)
1000
10%
10
100
($837.21)
($1,210.71)
13%
7%
par bond
How does the value change if rd increases to 13%?
discount bond
How does the value change if rd d
Chapter 11 Mini Case: Shrieves Casting Company
Situation
Shrieves Casting Company is considering adding a new line to its product mix. The production line would be set up
unused space in Shrieves' main plant. The machinerys invoice price would be approxim
What is the future value of an initial $100 after three years at a rate of 10%?
PV =
FV =
Rate =
Nper =
Pmt =
-100
$133.10
10%
3
0
What is the present value of $100 received in three years at a rate of 10%?
PV =
FV =
Rate =
Nper =
Pmt =
$75.13
-100
10%
3
Tax Rate
INCOME STATEMENT
Sales
Less: COGS
Less: Depreciation
Gross Profit
Less: SG&A
Operating Profit (EBIT)
Less: Interest exp.
Profit Before Tax
Less: Income Tax
Net Income
COMMON SIZE INCOME STATEMENT
Sales
Less: COGS
Less: Depreciation
Gross Profit
L
WACC for Petrochemical Devision
WACC = Rd*(D/V)(1-t)+Re(E/V)
10 yr US Bond
Spread to Treasury
t
Rd
beta
D/V
EMRP
Re
Equity Market Value
E/V
WACC
WACC for Entire Company
10 yr US Bond
t
D/v
spread
Rd
Cost of equity
beta
market risk
E/V
WACC
0.0466 whole co