Scribd Logo
Upload

Welcome to Scribd!

  • 1 views

    Fin 406 Ass

    Uploaded by

    tamjid islam

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd

    Fin 406 Ass

    Uploaded by

    tamjid islam
    1 views6 pages

    Original Title

    FIN 406 ASS

    Copyright

    © © All Rights Reserved

    Available Formats

    XLSX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    1 views6 pages

    Fin 406 Ass

    Uploaded by

    tamjid islam

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 6

    Current Market Capitalization $200 million

    Debt Structure $80 million


    Interest rate 6%
    Tax Rate 25%

    Equity Structure $120 million 10 million shares outstanding


    Risk-Free Rate 3% currently trading at $12 per share
    Market Return 12%
    Beta 1.2

    1 CAPM 13.80%
    2 Cost of Debt 4.5%

    3 Weight of Debt 0.4


    Weight of Equity 0.6

    4 WACC 10.08%
    Year Gross Cashflow Annual Operating Costs Annual Depreciation
    1 $15,000,000 $5,000,000 $5,625,000
    2 $15,000,000 $5,000,000 $5,625,000
    3 $15,000,000 $5,000,000 $5,625,000
    4 $15,000,000 $5,000,000 $5,625,000
    5 $15,000,000 $5,000,000 $5,625,000
    6 $15,000,000 $5,000,000 $5,625,000
    7 $15,000,000 $5,000,000 $5,625,000
    8 $15,000,000 $5,000,000 $5,625,000

    Net Present Value


    1.1008 PV of Year 1
    1.21176064 PV of Year 2
    1.333906113 PV of Year 3
    1.468363849 PV of Year 4
    1.616374925 PV of Year 5
    1.779305517 PV of Year 6
    1.958659513 PV of Year 7
    2.156092392 PV of Year 8
    PV of NCI
    NCO

    NPV

    Average Rate of Return


    Average NI
    Average Investment

    ARR

    Payback Period
    YEAR
    1
    2
    3
    4
    5
    6
    7
    8

    PBP
    CFBT Taxes (25%) Net Income Operating Cash Flow Salvage Value
    $4,375,000 $1,093,750 $3,281,250 $8,906,250 -
    $4,375,000 $1,093,750 $3,281,250 $8,906,250 -
    $4,375,000 $1,093,750 $3,281,250 $8,906,250 -
    $4,375,000 $1,093,750 $3,281,250 $8,906,250 -
    $4,375,000 $1,093,750 $3,281,250 $8,906,250 -
    $4,375,000 $1,093,750 $3,281,250 $8,906,250 -
    $4,375,000 $1,093,750 $3,281,250 $8,906,250 -
    $4,375,000 $1,093,750 $3,281,250 $8,906,250 $5,000,000
    $26,250,000

    Net Present Value


    8090706.76
    7349842.62
    6676819.24 Profitability Index (PI)
    6065424.46 PV of NCI 49695133.96
    5510014.95 PV of NCO 50000000
    5005464.16 PI 0.993902679205
    4547114.97
    6449746.80
    49695133.96
    50000000 Internal Rate of Return
    Year NCI
    -304866.04 0 -50000000
    1 8906250
    2 $8,906,250
    3 $8,906,250
    erage Rate of Return 4 $8,906,250
    $ 3,281,250 5 $8,906,250
    $ 27,500,000 6 $8,906,250
    7 $8,906,250
    11.93% 8 $13,906,250

    IRR 9.92%

    Payback Period
    NCI CNCI
    $8,906,250 $8,906,250
    $8,906,250 $17,812,500
    $8,906,250 $26,718,750
    $8,906,250 $35,625,000
    $8,906,250 $44,531,250
    $8,906,250 $53,437,500
    $8,906,250 $62,343,750
    $8,906,250 $71,250,000

    5.61

    Year Operating Cash Flow


    1 8906250
    2 8906250
    3 8906250
    4 8906250
    5 8906250
    6 8906250
    7 8906250
    8 8906250
    Net Cash Inflow
    $8,906,250
    $8,906,250
    $8,906,250
    $8,906,250
    $8,906,250
    $8,906,250
    $8,906,250
    $13,906,250

    You might also like