Assignment 1: End of Chapter Numericals

Ch 8: 3,6,7,13,18,20
Ch 10: 1,4,5,6
Ch 11: 3,4

Assignment 2: Read the articles “What is it worth: A General Manager’s guide to Valuation”
“Using APV: A Better tool for Valuing Operations”

Assignment 3: Read the case Sampa Video and answer the following questions (there is no
student data sheet in this case since there is very little data to process. Whatever is needed
can easily be replicated.)
1.    What is the value of the project assuming that the firm was entirely equity financed?
What are the annual projected free cash flows? What discount rate is appropriate?
2.      Value the project using the Adjusted Present Value (APV) approach assuming the firm
raises $750 thousand of debt to fund the project and keeps the level of debt constant in
perpetuity.
3.      Value the project using the WACC approach assuming the firm maintains a constant
25% debt-to-market value ratio in perpetuity.
4.      What are the end of the year debt balances implied by the 25% target debt-to-value
ratio?

Note: These are group assignments and each group should have a cover page which states
clearly the group number and group mates. Any excel sheet may be embedded in the word
doc and then uploaded to the link provided. Assignments are not optional and violation of the
above will disqualify the assignment. Assignment 2 need not be submitted but it must be read
and attempt must be made to understand. Questions related to them shall be asked in the
session.