Question

e vede s Considera prowth free cash flow in one year of 130.000 na weak antor 180.000 in a strong ma h achulcome being the inte ment regard for the project 100.000 and the pr 20% Thereforestre 10 Asume nowe or distress ) a. What is the NPV of this project b. Surpose that to raise the ind for the initial investment, the project is to investors as an u tem The guy holders will receive the cash fow of the road in one year How much money can be used in male of the univered out C. SUDDoS mint 100.000 t rased by borrowing the rest rate. What the cash flow of the red equilinaw and a strong mat the end of eart and what is the man scoring to MM Assume that these termina current and ignoranyag pony a. What the NPV of this pro The NPV is Round to meet b. Suppose that to mais eunds for the investment, the project is to investors s u m . The guy holders receive the cash flow of the one year How much money can be used in this th i of the leve l was Dental The name c. Suppose the of the univered equity is s o und to the nearest 100 000 sid ed by borrowing at the stree t what the c ow of the lowed out in a woman and a strong mantate and a year, and what is more of the red out The cash flow of the levered in a weak a tandang mana the end of you and the name value of the leveredeutyccording to s ound to me ) Co Flow Strong Economy Cash Flow Weak for 5100 000 Levered Equity

Answer 1

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PV, FV, ANNUITY (Autosaved) - Microsoft Excel (Product Activation Failed) Review View Add-Ins File Home Insert Page Layout Formulas Data - 2x % Cut AutoSum - A Calibri 11 AA = = = Dr Wrap Text General BIU D - - A- ES E E $ % 48.08 Insert Delete Format Merge & Center E E Copy Paste Format Painter Clipboard CE187 BU Conditional Format Formatting as Table Styles Cell Styles Fill 2 Clear Sort & Find & Filter Select Editing Alignment Number Cells Font fax BW BV BX BY BZ CA CB СС CD E CF CG 184 0.5*130000+ 0.5*180000 = 155000 185 186 187 188 EXPECTED CASH FLOW AT THE END OF THE YEAR = NPV = PV OF CFAT - INVESTMENT NPV = 155000 XPVIF @20%, 1 YEAR - 100000 NPV = 155000/(1+0.2) - 100000 = 29167 189 190 INITIAL MARKET VALUE OF EQUITY = CFAT FOR THE YEAR/ (1 + COST OF EQUITY) INITIAL MARKET VALUE OF UNLEVRED EQUITY = 155000/1.2 = 129167 191 192 193 194 110000 SUPPOSE FUNDS ARE RAISED BY ISSUING DEBT, AFTER A YEAR PAYMENT TO THEM = 100000(1+0.10) = CASH FLOW AVAILABLE TO DEBT HOLDERS = 110000 SCENARIO1 OR 110000 SCENARIO2 195 196 197 198 CASH FLOW AVAILABLE TO EQUITY = OR (130000 - 110000) = (180000-110000) = 20000 70000 199 WILL NOT CHANGE 200 201 202 INITIAL VALUE ACCORDING TO MM = LESS : DEBT INITIAL EQUITY = CAP STRU VALUE profit margin loan with points 129167 100000 29167 EXPONPER APR CPI ear FVA p LOCK BOX DILUTION DOLLAR COST AVG pva 52 53 0 v, fv, annuity ferences Red STATE56 57 BO 130% * 4 - DO 4 ENG 30-10-2019

PV, FV, ANNUITY (Autosaved) - Microsoft Excel (Product Activation Failed) Review View Add-Ins File Home Insert Page Layout Formulas Data - 2x % Cut Calibri 11 AA = = = Dr Wrap Text General BIU D - - A- ES E E Merge & Center $ % 48.08 Insert Delete Format Conditional Format Formatting as Table Styles Cell Styles Fill 2 Clear E Copy Paste Format Painter Clipboard BV204 BU Sort & Filter Editing Find & Select Font Alignment Number Cells fax BW BV BX BY 27 BZ CA СВ CC CD CE CF CG CT 192 193 110000 194 SUPPOSE FUNDS ARE RAISED BY ISSUING DEBT, AFTER A YEAR PAYMENT TO THEM = 100000(1+0.10) = CASH FLOW AVAILABLE TO DEBT HOLDERS = 110000 SCENARIO1 OR 110000 SCENARIO2 195 196 197 CASH FLOW AVAILABLE TO EQUITY = OR (130000 - 110000) = (180000-110000) = 20000 70000 198 199 200 201 WILL NOT CHANGE INITIAL VALUE ACCORDING TO MM = LESS : DEBT INITIAL EQUITY = 129167 100000 29167 202 203 204 205 206 207 208 209 210 DATE O INITIAL VALUE 100000 29167 DATE 1 CASH FLOW STRONG ECONOMY 110000 70000 debt levered equity CASH FLOW WEAK ECONOMY 110000 20000 p CAP STRU VALUE profit margin loan with points LOCK BOX DILUTION DOLLAR COST AVG EXPONPER APR CPI ear FVA pva 52 53 v, fv, annuity ferences STATE56 57 BOU 130% 0 -+ Red _ O EJENDA ENG 20-10-2019