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Probabilty

Sales
Sales Units per year
0.1
750,000
0.3
1,000,000
0.6
1,250,000

Selling Price
Variable Cost
Fixed Cost
Intial Investment
Tax
Common Equity
Airtech Equity Supply

3,000 per unit


1,000 per unit
1,500,000,000
3,000,000,000
40%
3,000,000,000
1,500,000,000

Contribution Margin

2,000

Income Statement
Sales Unit

20%
726,000

40%
694,000

Revenue
VAR Cost
Gross Profit

2,178,000,000
726,000,000
1,452,000,000

2,081,999,082
693,999,694
1,387,999,388

Fixed Cost

1,500,000,000

1,500,000,000

Net Operating Income


Cost of Debt
Debt
Interest Expense
Income before tax
Tax @ 40%

(48,000,000)
600,000,000
12%
72,000,000
(120,000,000)
(48,000,000)

Net Income

ROE
Q2 Answer
roe

Net Income/ Shareholder


Equity
0.00%
0%

Cost of Equity
Q3- Ks all equity

Rrf +a1(beta)+a2(roe)
16.00%

All equity Capital Struct


Equity
Debt

100% equity
100%
0%

(112,000,612)
1,200,000,000
14%
168,000,000
(280,000,612)
(112,000,245)
(367)

0.00%

20% debt 80% equity


80%
20%

Rrf
a1
a2
beta levered
Cost of Debt

11%
2
0.3
1

Q4
a2
roe

0.6
7%
Ks

245.200%

For 0.75 Million Sales unit


Debt
Net Operating Income
Debt
Cost of Debt
Interest Expense

0%
0
0%
-

Income before tax


Tax @ 40%

Net Income
Common Equity
ROE

11%
2
0.6
1.15
12%

20%
0
600,000,000
12%
-

3,000,000,000
0%

2,400,000,000
0%

For 1million Sales unit


Debt
Net Operating Income
Debt
Cost of Debt
Interest Expense

0%
500,000,000
0%
-

20%
###
600,000,000
12%
60,000,000

Income before tax


Tax @ 40%

500,000,000
200,000,000

440,000,000
176,000,000

Net Income
Common Equity
ROE

300,000,000
3,000,000,000
10%

264,000,000
2,400,000,000
11%

Debt
For 1.25million Sales unit
Revenue

0%
1,250,000
2,500,000,000

20%
###
2,500,000,000

Net Operating Income

1,000,000,000

###

Debt
Cost of Debt
Interest Expense

0%
-

600,000,000
12%
120,000,000

Income before tax


Tax @ 40%

1,000,000,000
400,000,000

Net Income
Common Equity
ROE

600,000,000
3,000,000,000
20%

528,000,000
2,400,000,000
22%

10.00%
16.00%

11.00%
16.60%

roe
ks

880,000,000
352,000,000

Q1
Fixed Cost/ CM

Break Even Sales


Answer

750,000

0
750,000
2,250,000,000
750,000,000
1,500,000,000
1,500,000,000
0%
-

0.00%

40% debt 60% equity


60%
40%

11%
2
0.6
1.4
14%

295.200%

40%
0
1,200,000,000
14%
1,800,000,000
0%

40%
500,000,000
1,200,000,000
14%
70,000,000
430,000,000
172,000,000
258,000,000
1,800,000,000
14%
40%
1,250,000
2,500,000,000

1,000,000,000

1,200,000,000
14%
140,000,000
860,000,000
344,000,000
516,000,000
1,800,000,000
29%
14.33%
18.00%

Probabilty

Sales
Sales Units per year
0.1
750,000
0.3
1,000,000
0.6
1,250,000

Selling Price
Variable Cost
Fixed Cost
Intial Investment
Tax
Common Equity
Airtech Equity Supply

3,000 per unit


1,000 per unit
1,500,000,000
3,000,000,000
40%
3,000,000,000
1,500,000,000

Contribution Margin

2,000

Income Statement
Sales Unit

750,000

1,000,000

Revenue
VAR Cost
Gross Profit

2,250,000,000
750,000,000
1,500,000,000

3,000,000,000
1,000,000,000
2,000,000,000

Fixed Cost

1,500,000,000

1,500,000,000

Net Operating Income


Tax @ 40%

500,000,000
200,000,000

Net Income

300,000,000

ROE
Q2 Answer
roe

Net Income/ Shareholder


Equity
0.00%
10%

Cost of Equity
Q3- Ks all equity

Rrf +a1(beta)+a2(roe)
16.00%

All equity Capital Struct


Equity
Debt
Rrf
a1
a2
beta levered

100% equity

10.00%

20% debt 80% equity


100%
0%
11%
2
0.3
1

80%
20%
11%
2
0.6
1.15

Cost of Debt

12%

Q4
a2
roe

0.6
7%
Ks

245.200%

For 0.75 Million Sales unit


Debt
Net Operating Income
Debt
Cost of Debt
Interest Expense

0%
0
0%
-

20%
0
600,000,000
12%
72,000,000

Income before tax


Tax @ 40%

(72,000,000)
(28,800,000)

Net Income
Common Equity
ROE

3,000,000,000
0%

(43,200,000)
2,400,000,000
-2%

For 1million Sales unit


Debt
Net Operating Income
Debt
Cost of Debt
Interest Expense

0%
500,000,000
0%
-

20%
500,000,000
600,000,000
12%
72,000,000

Income before tax


Tax @ 40%

500,000,000
200,000,000

428,000,000
171,200,000

Net Income
Common Equity
ROE

300,000,000
3,000,000,000
10%

256,800,000
2,400,000,000
11%

Debt
For 1.25million Sales unit
Debt
Cost of Debt
Interest Expense

0%
1,000,000,000
0%
-

Income before tax


Tax @ 40%

1,000,000,000
400,000,000

Net Income
Common Equity
ROE

600,000,000
3,000,000,000
20%

556,800,000
2,400,000,000
23%

10.00%
16.00%

12.50%
17.05%

20%
726,000

40%
694,000

roe
ks
Q5
Income Statement
Sales Unit

20%
1,000,000,000
600,000,000
12%
72,000,000
928,000,000
371,200,000

Revenue
VAR Cost
Gross Profit

2,177,999,928
725,999,976
1,451,999,952

2,081,999,082
693,999,694
1,387,999,388

Fixed Cost

1,500,000,000

1,500,000,000

Net Operating Income


Cost of Debt
Debt
Interest Expense
Income before tax
Tax @ 40%

(48,000,048)
600,000,000
12%
72,000,000
(120,000,048)
(48,000,019)

(112,000,612)
1,200,000,000
14%
168,000,000
(280,000,612)
(112,000,245)

(29)

(367)

Net Income

Q6
Value
S

D+[(EBIT-kd)(1-t)]/ks
V-D
0% debt

Value
Value
Value

For 0.75 Million Sales unit


For 1million Sales unit
For 1.25million Sales unit

1,875,000,000
3,750,000,000

Q11
VL=Vu+tD
VL
VL
VL

Q12
Vu
For 0.75 Million Sales unit
For 1million Sales unit
For 1.25million Sales unit
tps
tpd
tc

For 0.75 Million Sales unit


For 1million Sales unit
For 1.25million Sales unit

0% debt
1,875,000,000.00
3,750,000,000.00
0.25
0.45
0.4

1,875,000,000
3,750,000,000

Q1
Break Even Sales
Answer

Fixed Cost/ CM
750,000

1,250,000
3,750,000,000
1,250,000,000
2,500,000,000
1,500,000,000
1,000,000,000
400,000,000
600,000,000

20.00%

40% debt 60% equity


60%
40%
11%
2
0.6
1.4

14%

295.200%

40%
0
1,200,000,000
14%
168,000,000
(168,000,000)
(67,200,000)
(100,800,000)
1,800,000,000
-6%

40%
500,000,000
1,200,000,000
14%
168,000,000
332,000,000
132,800,000
199,200,000
1,800,000,000
11%

40%
1,000,000,000
1,200,000,000
14%
168,000,000
832,000,000
332,800,000
499,200,000
1,800,000,000
28%
16.67%
18.80%

0
750,000
2,250,000,000
750,000,000
1,500,000,000
1,500,000,000
###
0%
###
###

S
20% debt

40% debt
600,000,000
1,773,020,528
2,946,041,055

20% debt
1,200,000,000
1,200,000,000
2,263,773,203
2,373,020,528
3,327,546,407
3,546,041,055

20% debt

40% debt
840,000,000
2,013,020,528
3,186,041,055

1,680,000,000
2,743,773,203
3,807,546,407

Vl
20% debt

40% debt
109,090,909
1,984,090,909
3,859,090,909

218,181,818
2,093,181,818
4,077,272,727

S
40% debt
2,400,000,000
3,463,773,203
4,527,546,407