ICO

Year-a 0 1
Cash Flow-d -74000 -2000
Cummulative-c -2000
PVFCF -1851.85185185

Disc/Int Rate 8%

Year (a) Less/=

(C.)ummulative
PBP Next Inflow (d)
ICO (b) 74000
PBP= #DIV/0!

ICO
Year 0 1
Cash Flow -60000 19999
L: PVFCF @ 12.0% 17856.25
H: PVFCF @ 15.0% 17390.43478261

IRR when PVFCF=ICO 1433

Book method (matrix)

Interest (i) Lower 0.12
0.03 IRR= i(lower)+Y* 0.1433
Interest (i) higher 0.15
Putting Values in:
*Y=YTM-V(at ilower)/V(at i Higher)-V(at I lower)= 0.0233

Invest /ICO
Year 0
Savings with Dep, Taxes, Interests -60000
Dep MACRS table @
Depreciation amount
Profit before Taxes
Tax deduction @ 38%
Cash Flow (Savings-Taxes only)
 ICO
Year 0
Cash Flow -60000
Cummulative
PVFCF

Disc/Int Rate 15%

Year (a) Less/=

(C.)ummulative
PBP Next Inflow (d)
ICO (b)
PBP=
 2 3 4 5 6 7
-2000 -2000 -2000 -13000 -4000 -4000
-4000 -6000 -8000 -21000 -25000 -29000
-1714.6776406 -1587.664482 -1470.05970559291 -8847.58156144 -2520.678507532 -2333.961581049

NPV=PVFCF-ICO -91625.1309076
PI=PVFCF/ICO -0.2381774447

Calculating IRR

2 3 4 5 6 7
22534 15776 14089 12400
19319.27297668 12523.497434 10355.8355960492 8439.231643219 0 0
17038.94139887 10372.976083 8055.43147716025 6164.991517699 0 0

Valued (v) lower 63039.1692437954

3157.493857696
YTM 59881.6753860993 4016.3939846148
Valued (v) higher 59022.7752591806

Data for EBIT Questions

1 2 3 4 5 6
20000 20000 20000 20000 20000
33.33% 44.45% 14.81% 7.41% 0.00%
19998 26670 8886 4446 0 0
2 -6670 11114 15554 20000 0
0.76 -2534.6 4223.32 5910.52 7600 0
19999.24 22534.6 15776.68 14089.48 12400 0
 1 2 3 4 5 6
19999.24 22534.6 15776.68 14089.48 12400 0
19999.24 42533.84 58310.52 72400 84800 84800
17390.64347826 17039.395085 10373.4231938851 8055.705918718 6164.9915176988 0

3 NPV=PVFCF-ICO -975.8408063709
58310 PI=PVFCF/ICO 0.9837359865605
14089
60000
3.12
 8 9 10
5000
-24000 -24000 -24000
2701.34442251 0 0

8 9 10

0 0 0
0 0 0

7 8 9 10

0 0 0 0
0 0 0 0
0 0 0 0
0 0 0 0
 7 8 9 10
0 0 0 0
84800 84800 84800 84800
0 0 0 0
 WACC
Weighted Cost of each source
Sr. Source Value CoC RoC
(CoC x RoC)
1 Preferred Shares 2000000 12.00% 12.50% 1.500%
2 Equity Shares 8000000 17.00% 50.00% 8.500%
3 Loan (Bonds, Deb) 6000000 7.80% 37.50% 2.925%
4 Retained Earn 0.00% 0.000%
Total Capital 16000000 100% 12.925%

Sources values CoC RoC WCES

Bonds B Ki B/B+S Ki*B/B+S
CS S Ke S/B+S Ke*S/B+S
Total B+S Ki*B/B+S + Ke*S/B+S
 Less cheap
Most Expensive
Cheapest
Most Expensive
Ko/WACC Minimize

Kd 0.078
0.0714286