Par value 1000 1 90 0.

887198
Coupon interest rate 9% 2 90 0.787121
Years to Maturity 8 years 3 90 0.698333
Current Value 820 4 90 0.61956
5 90 0.549672
Yield to Maturity 12.714% 6 90 0.487668
7 90 0.432659
8 1090 0.383854

1 420000 0.892857
2 470000 0.797194
3 530000 0.71178
4 590000 0.635518
5 660000 0.567427

1000
79.8478606994
70.8408984252
62.8499354364
55.760365441
49.4705099142
43.8901598262
38.9392818653
418.400988393
820

375,000.00
374,681.12
377,243.53
374,955.67
374,501.72
-650000
1,226,382.04
 MontBeginning baInterest a Installment
5.40% 1 ### 1,665.00 2,077.66
0.0045 178.0846 2 ### 1,663.14 2,077.66
1.0045 370000 3 ### 1,661.28 2,077.66
1.055357 2077.664 4 ### 1,659.40 2,077.66
5.536% 5 ### 1,657.52 2,077.66
6 ### 1,655.63 2,077.66
7 ### 1,653.73 2,077.66
8 ### 1,651.82 2,077.66
9 ### 1,649.91 2,077.66
10 ### 1,647.98 2,077.66
11 ### 1,646.05 2,077.66
12 ### 1,644.11 2,077.66
13 ### 1,642.16 2,077.66
14 ### 1,640.20 2,077.66
15 ### 1,638.23 2,077.66
16 ### 1,636.25 2,077.66
17 ### 1,634.26 2,077.66
18 ### 1,632.27 2,077.66
19 ### 1,630.26 2,077.66
20 ### 1,628.25 2,077.66
21 ### 1,626.23 2,077.66
22 ### 1,624.20 2,077.66
23 ### 1,622.16 2,077.66
24 ### 1,620.11 2,077.66
25 ### 1,618.05 2,077.66
26 ### 1,615.98 2,077.66
27 ### 1,613.90 2,077.66
28 ### 1,611.82 2,077.66
29 ### 1,609.72 2,077.66
30 ### 1,607.61 2,077.66
Ending balance MontBeginning baInterest a Installment Ending balanceMontBeginning baInterest amount
### 31 ### 1605.498 2,077.66 ### 61 ### 1537.4161699651
### 32 ### 1603.373 2,077.66 ### 62 ### 1534.9850550453
### 33 ### 1601.239 2,077.66 ### 63 ### 1532.5430001084
### 34 ### 1599.095 2,077.66 ### 64 ### 1530.0899559242
### 35 ### 1596.941 2,077.66 ### 65 ### 1527.6258730413
### 36 ### 1594.778 2,077.66 ### 66 ### 1525.1507017853
### 37 ### 1592.605 2,077.66 ### 67 ### 1522.6643922587
### 38 ### 1590.422 2,077.66 ### 68 ### 1520.1668943393
### 39 ### 1588.23 2,077.66 ### 69 ### 1517.6581576792
### 40 ### 1586.027 2,077.66 ### 70 ### 1515.1381317041
### 41 ### 1583.815 2,077.66 ### 71 ### 1512.6067656121
### 42 ### 1581.593 2,077.66 ### 72 ### 1510.0640083727
### 43 ### 1579.36 2,077.66 ### 73 ### 1507.5098087258
### 44 ### 1577.118 2,077.66 ### 74 ### 1504.9441151804
### 45 ### 1574.865 2,077.66 ### 75 ### 1502.3668760141
### 46 ### 1572.603 2,077.66 ### 76 ### 1499.7780392715
### 47 ### 1570.33 2,077.66 ### 77 ### 1497.1775527636
### 48 ### 1568.047 2,077.66 ### 78 ### 1494.5653640664
### 49 ### 1565.754 2,077.66 ### 79 ### 1491.9414205201
### 50 ### 1563.45 2,077.66 ### 80 ### 1489.3056692278
### 51 ### 1561.136 2,077.66 ### 81 ### 1486.6580570547
### 52 ### 1558.812 2,077.66 ### 82 ### 1483.9985306268
### 53 ### 1556.477 2,077.66 ### 83 ### 1481.32703633
### 54 ### 1554.132 2,077.66 ### 84 ### 1478.6435203089
### 55 ### 1551.776 2,077.66 ### 85 ### 1475.9479284657
### 56 ### 1549.409 2,077.66 ### 86 ### 1473.2402064591
### 57 ### 1547.032 2,077.66 ### 87 ### 1470.5202997036
### 58 ### 1544.644 2,077.66 ### 88 ### 1467.7881533676
### 59 ### 1542.246 2,077.66 ### 89 ### 1465.0437123731
### 60 ### 1539.836 2,077.66 ### 90 ### 1462.2869213942
Installment amount Ending balance MontBeginning balance Interest amount
2,077.66 341,107.79 91 324,337.27 1459.5177248558
2,077.66 340,565.11 92 323,719.13 1456.73606693302
2,077.66 340,019.99 93 323,098.20 1453.94189154959
2,077.66 339,472.42 94 322,474.48 1451.13514237693
2,077.66 338,922.38 95 321,847.95 1448.315762833
2,077.66 338,369.86 96 321,218.60 1445.48369608112
2,077.66 337,814.87 97 320,586.42 1442.63888502886
2,077.66 337,257.37 98 319,951.39 1439.78127232686
2,077.66 336,697.36 99 319,313.51 1436.9108003677
2,077.66 336,134.84 100 318,672.76 1434.02741128472
2,077.66 335,569.78 101 318,029.12 1431.13104695088
2,077.66 335,002.18 102 317,382.59 1428.22164897753
2,077.66 334,432.03 103 316,733.15 1425.2991587133
2,077.66 333,859.31 104 316,080.78 1422.36351724288
2,077.66 333,284.01 105 315,425.48 1419.41466538584
2,077.66 332,706.12 106 314,767.23 1416.45254369545
2,077.66 332,125.64 107 314,106.02 1413.47709245745
2,077.66 331,542.54 108 313,441.83 1410.48825168888
2,077.66 330,956.82 109 312,774.66 1407.48596113685
2,077.66 330,368.46 110 312,104.48 1404.47016027733
2,077.66 329,777.45 111 311,431.29 1401.44078831395
2,077.66 329,183.79 112 310,755.06 1398.39778417674
2,077.66 328,587.45 113 310,075.80 1395.3410865209
2,077.66 327,988.43 114 309,393.47 1392.27063372562
2,077.66 327,386.71 115 308,708.08 1389.18636389275
2,077.66 326,782.29 116 308,019.60 1386.08821484564
2,077.66 326,175.15 117 307,328.03 1382.97612412782
2,077.66 325,565.27 118 306,633.34 1379.85002900176
2,077.66 324,952.65 119 305,935.53 1376.70986644764
2,077.66 324,337.27 120 305,234.57 1373.55557316203
Installment amount Ending balance Prinipal amount repaid MontBeginning balance Interest a
2,077.66 323,719.13 618.15 121 304,530.46 1370.387
2,077.66 323,098.20 620.93 122 303,823.19 1367.204
2,077.66 322,474.48 623.72 123 303,112.73 1364.007
2,077.66 321,847.95 626.53 124 302,399.07 1360.796
2,077.66 321,218.60 629.35 125 301,682.20 1357.57
2,077.66 320,586.42 632.18 126 300,962.11 1354.329
2,077.66 319,951.39 635.03 127 300,238.77 1351.074
2,077.66 319,313.51 637.88 128 299,512.18 1347.805
2,077.66 318,672.76 640.75 129 298,782.33 1344.52
2,077.66 318,029.12 643.64 130 298,049.18 1341.221
2,077.66 317,382.59 646.53 131 297,312.74 1337.907
2,077.66 316,733.15 649.44 132 296,572.98 1334.578
2,077.66 316,080.78 652.36 133 295,829.90 1331.235
2,077.66 315,425.48 655.30 134 295,083.47 1327.876
2,077.66 314,767.23 658.25 135 294,333.68 1324.502
2,077.66 314,106.02 661.21 136 293,580.52 1321.112
2,077.66 313,441.83 664.19 137 292,823.97 1317.708
2,077.66 312,774.66 667.18 138 292,064.01 1314.288
2,077.66 312,104.48 670.18 139 291,300.63 1310.853
2,077.66 311,431.29 673.19 140 290,533.82 1307.402
2,077.66 310,755.06 676.22 141 289,763.56 1303.936
2,077.66 310,075.80 679.27 142 288,989.83 1300.454
2,077.66 309,393.47 682.32 143 288,212.62 1296.957
2,077.66 308,708.08 685.39 144 287,431.92 1293.444
2,077.66 308,019.60 688.48 145 286,647.70 1289.915
2,077.66 307,328.03 691.58 146 285,859.95 1286.37
2,077.66 306,633.34 694.69 147 285,068.65 1282.809
2,077.66 305,935.53 697.81 148 284,273.80 1279.232
2,077.66 305,234.57 700.95 149 283,475.37 1275.639
2,077.66 304,530.46 704.11 150 282,673.34 1272.03
Installment Ending balance Prinipal amount repaid
2,077.66 303,823.19 707.28
2,077.66 303,112.73 710.46
2,077.66 302,399.07 713.66
2,077.66 301,682.20 716.87
2,077.66 300,962.11 720.09
2,077.66 300,238.77 723.33
2,077.66 299,512.18 726.59
2,077.66 298,782.33 729.86
2,077.66 298,049.18 733.14
2,077.66 297,312.74 736.44
2,077.66 296,572.98 739.76
2,077.66 295,829.90 743.09
2,077.66 295,083.47 746.43
2,077.66 294,333.68 749.79
2,077.66 293,580.52 753.16
2,077.66 292,823.97 756.55
2,077.66 292,064.01 759.96
2,077.66 291,300.63 763.38
2,077.66 290,533.82 766.81
2,077.66 289,763.56 770.26
2,077.66 288,989.83 773.73
2,077.66 288,212.62 777.21
2,077.66 287,431.92 780.71
2,077.66 286,647.70 784.22
2,077.66 285,859.95 787.75
2,077.66 285,068.65 791.29
2,077.66 284,273.80 794.85
2,077.66 283,475.37 798.43
2,077.66 282,673.34 802.02
2,077.66 281,867.71 805.63
Scenario Probability Stock Fund Probability * Stock Fund Deviation
Severe Recession 0.05 -37% -1.850% -47.00%
Mild Recession 0.25 -11% -2.750% -21.00%
Normal Growth 0.4 14% 5.600% 4.00%
Boom 0.3 30% 9.000% 20.00%
Mean = 10.000%
Variance
Standard Deviation

Scenario Probability Bond Fund Probability * Stock Fund Deviation

Severe Recession 0.05 -9% -0.450% -14.00%
Mild Recession 0.25 15% 3.750% 10.00%
Normal Growth 0.4 8% 3.200% 3.00%
Boom 0.3 -5% -1.500% -10.00%
Mean = 5.000%
Variance
Standard Deviation

Scenario Product of deviations

Severe Recession 6.5800%
Mild Recession -2.1000%
Normal Growth 0.1200%
Boom -2.0000%
covariance 0.6500%
 Rate of Return
Square of Deviation
22.090%
4.410%
0.160%
4.000%

7.665%
27.686%

Square of Deviation
1.960%
1.000%
0.090%
1.000%

1.013%
10.062%
Year 2024 2023 2022
Year from today 3 2 1
Profit After Tax 710640 658800 594456
Add: Non cash expenses
Depreciation 50000 30000 20000
Therefore Free cashflows 760640 688800 614456
PV factor @12% 0.71178 0.797194 0.892857
PV of the Free cashflows 541408.5 549107.1 548621.4

9888320
7038311
8677448
1735490
 Unlevered Beta 0.73
Debt Beta 0
Taxes 25%

a Scenario - 1
Equity portion 70%
Debt Portion 30%
Levered Beta Formula = Unlevered Beta * [1 + Debt portion* (1-tax rate)/Equity Portion]
Therefore New Equity Beta = 0.9646428571

b Scenario - 2
New tax rate 15%
Equity portion 40%
Debt Portion 60%
Levered Beta Formula = Unlevered Beta * [1 + Debt portion* (1-tax rate)/Equity Portion]
Therefore New Equity Beta = 1.66075
 Market value of stock = 14 million
Market value of debt = 9 million
Equity Beta = 1.9
Risk free rate = 5.32%
Expected market return = 12.70%
Taxes = 0%
cost of Debt = 11.57%

a Risk Premium formula = Market Return - Risk free rate

Therefore risk premium = 7.38%

b Expected return on Equity formula = Risk free rate + Bets * Risk premium
Therefore Expecter return = 19.342%

c Weighted Average cost of capital formula = [Equity return * Equity weight] + [Debt cost * Debt weight * (1 - tax rate
Equity Weight = 0.60869565217
Debt Weight = 0.39130434783
Therefore Weighted Average cost of capital = 16.301%
* Debt weight * (1 - tax rate)]
 Probability X Y Deviation from Expecte
Deviation from ExpectProduct of Deviations
0.1 -10% -35% -22.00% -49.00% 10.7800%
0.2 2% 0% -10.00% -14.00% 1.4000%
0.4 12% 20% 0.00% 6.00% 0.0000%
0.2 20% 25% 8.00% 11.00% 0.8800%
0.1 38% 45% 26.00% 31.00% 8.0600%
Expected Returns 12.00% 14.00%
Sum of Product of deviations 21.12%
coefficient of variation 20.55%

Probability Deviation from Expected returns Square of Deviations

0.1 24.01%
0.2 1.96%
0.4 0.36%
0.2 1.21%
0.1 9.61%
Expected Returns
Sum of Square of deviations 37.15%
Standard Deviation 27.26%
uct of Deviations

re of Deviations
 Year 0 1 2 3
Initial Investment - Machine cost € -8,250,000
feasibility study cost € -50,000
Additional Working capital € -1,800,000 € -3,600,000
Recovery of Working capital
Additional Revenues Generated € 30,000,000 € 30,000,000 € 30,000,000
Decrease in Sale due to disruption € -15,000,000
Less: cost of goods sold € 10,500,000 € -21,000,000 € -21,000,000 € -21,000,000
Less: cost of additional personell € -6,000,000 € -6,000,000 € -6,000,000
Less: Depreciation of equipment € -825,000 € -825,000 € -825,000
Incremental Income before taxes € -4,500,000 € 2,175,000 € 2,175,000 € 2,175,000
Less: Taxes € 1,575,000 € -761,250 € -761,250 € -761,250
Incremental Income after taxes € -2,925,000 € 1,413,750 € 1,413,750 € 1,413,750
Add: Depreiation € 825,000 € 825,000 € 825,000
Free cash flows € -13,025,000 € -1,361,250 € 2,238,750 € 2,238,750
1.0000 0.9349 0.8741 0.8172
€ -13,025,000 € -1,272,642 € 1,956,782 € 1,829,410
€ 2,035,701 € 12,516,250

€ 2,035,701
5.5907
 4 5 6 7 8 9

€ 30,000,000 € 30,000,000 € 30,000,000 € 30,000,000 € 30,000,000 € 30,000,000

€ -21,000,000 € -21,000,000 € -21,000,000 € -21,000,000 € -21,000,000 € -21,000,000

€ -6,000,000 € -6,000,000 € -6,000,000 € -6,000,000 € -6,000,000 € -6,000,000
€ -825,000 € -825,000 € -825,000 € -825,000 € -825,000 € -825,000
€ 2,175,000 € 2,175,000 € 2,175,000 € 2,175,000 € 2,175,000 € 2,175,000
€ -761,250 € -761,250 € -761,250 € -761,250 € -761,250 € -761,250
€ 1,413,750 € 1,413,750 € 1,413,750 € 1,413,750 € 1,413,750 € 1,413,750
€ 825,000 € 825,000 € 825,000 € 825,000 € 825,000 € 825,000
€ 2,238,750 € 2,238,750 € 2,238,750 € 2,238,750 € 2,238,750 € 2,238,750
0.7640 0.7142 0.6677 0.6243 0.5836 0.5457
€ 1,710,328 € 1,598,998 € 1,494,914 € 1,397,606 € 1,306,632 € 1,221,579
 10 11

€ 3,000,000 € 2,400,000
€ 30,000,000

€ -21,000,000
€ -6,000,000
€ -825,000
€ 2,175,000
€ -761,250
€ 1,413,750
€ 825,000
€ 5,238,750 € 2,400,000
0.5101 0.4769
€ 2,672,466 € 1,144,628
 4.80% 1 0.954198
104.80% 2 0.910495 1
0.655765 3 0.868793 2
0.344235 4 0.829001 3
7.171555 5 0.791031 3
6 0.754801
7 0.72023
8 0.687242 6.51579 215021.1 248021.1
9 0.655765 28853.67
7.171555 143431.1
327715.2

33000
0.915516 120 109.8619
0.83817 120 100.5804
0.767358 120 92.08297
0.767358 1000 767.3581
1069.883
 1 36000 0.900901 32432.43
2 36000 0.811622 29218.41
3 36000 0.731191 26322.89
11.00% 4 36000 0.658731 23714.31
5 36000 0.593451 21364.25
5 300000 0.593451 178035.4
311087.7
Date coupon payment Interest Revenue
i.e. 300,000 * 12% 11% of carrying value
1st January 2021
31st December 2021 36000 34219.6459
31st December 2022 36000 34023.806949
31st December 2023 36000 33806.42571339
31st December 2024 36000 33565.1325418629
31st December 2025 36000 33297.2971214678
168912.308225721
Reduction in carrying value carrying value
coupon payment - Interest revenue
311,087.69
1780.3541 309,307.34
1976.193051 307,331.14
2193.57428661 305,137.57
2434.8674581371 302,702.70
2702.70287853218 300,000.00
11087.6917742793
Market Price Initial Investment Sale Proceeds Profit or Loss
37 3700 3700 0
38 3700 3800 100
39 3700 3900 200
40 3700 4000 300
41 3700 4100 400
42 3700 4200 500
43 3700 4300 600
44 3700 4400 700
45 3700 4500 800
46 3700 4600 900
47 3700 4700 1000
48 3700 4800 1100
49 3700 4900 1200
50 3700 5000 1300
51 8800 10000 1200
52 8900 10000 1100
53 9000 10000 1000
54 9100 10000 900
55 9200 10000 800
56 9300 10000 700
57 9400 10000 600
58 9500 10000 500
59 9600 10000 400
60 9700 10000 300
61 9800 10000 200
62 9900 10000 100
63 10000 10000 0
64 10100 10000 -100
65 10200 10000 -200
66 10300 10000 -300
67 10400 10000 -400
68 10500 10000 -500
69 10600 10000 -600
70 10700 10000 -700
71 10800 10000 -800
72 10900 10000 -900
73 11000 10000 -1000
74 11100 10000 -1100
75 11200 10000 -1200
76 11300 10000 -1300
77 11400 10000 -1400
78 11500 10000 -1500
79 11600 10000 -1600
80 11700 10000 -1700
81 11800 10000 -1800
82 11900 10000 -1900
83 12000 10000 -2000
84 12100 10000 -2100
85 12200 10000 -2200
86 12300 10000 -2300
87 12400 10000 -2400
88 12500 10000 -2500
89 12600 10000 -2600
90 12700 10000 -2700
91 12800 10000 -2800
92 12900 10000 -2900
93 13000 10000 -3000
94 13100 10000 -3100
95 13200 10000 -3200
96 13300 10000 -3300
97 13400 10000 -3400
98 13500 10000 -3500
 Year ACE Ltd Square of Deviations from the Return
2016 25% 1.392%
2017 11% 0.048%
2018 3% 1.040%
2019 17% 0.144%
2020 10% 0.102%
Average Return 13.20% 2.728%
Standard Deviation 7.386%

Year S&P 500 Square of Deviations from the Return

2016 22% 0.5776%
2017 15% 0.0036%
2018 6% 0.7056%
2019 15% 0.0036%
2020 14% 0.0016%
Average Return 14.40% 1.2920%
Standard Deviation 5.0833%
 Probabilities Stock A return Probability * Stock return
Recession 29% -9% -2.6100%
Normal 39% 2% 0.7800%
Boom 32% 15% 4.8000%
Expected Return = Sum of (Probability * return) 2.9700%
Sum of Square of Deviation =
Therefore Standard Deviation = Square root of [Sum of square of deviations/3]

Probabilities Stock B Return Probability * Stock return

Recession 29% 4% 1.1600%
Normal 39% -8% -3.1200%
Boom 32% 23% 7.3600%
Expected Return = Sum of (Probability * return) 5.4000%
Sum of Square of Deviation =
Therefore Standard Deviation = Square root of [Sum of square of deviations/3]
 Deviation of the Return from Expected return
i.e. Return - 2.97% Square of Deviations
-11.9700% 1.4328%
-0.9700% 0.0094%
12.0300% 1.4472%

e of Deviation = 2.8894%
e root of [Sum of square of deviations/3] 9.8140%

Deviation of the Return from Expected return

i.e. Return - 5.40% Square of Deviations
-1.400% 0.0196%
-13.400% 1.7956%
17.600% 3.0976%

e of Deviation = 4.9128%
e root of [Sum of square of deviations/3] 12.7969%
Year 0
cost of equipment (A) A -2550000
Receipts from disposing old equipment (B) B 200000
Investment Allowance from government (E ) E 127500
Savings in Operating costs
Less: Depreciation expense @20%
Net savings before taxes
Less: Taxes@30%
Net savings after taxes
Add: Depreiation i.e. Non cash expense
Free cashflows from operations (c ) D
Salvage Value (D) E
Total cashflows from the new equipment (F = A + B + c + D + E) F = A + -2222500
Pv factor @12% (G) G 1
PV of the total cashflows due to new equipment F * G -2222500
Thereofore NPV of the project = Sum of all the PV of cashflows =
 1 2 3 4 5

609000 1015000 1015000 1015000 1015000

-520000 -520000 -520000 -520000 -520000
89000 495000 495000 495000 495000
-26700 -148500 -148500 -148500 -148500
62300 346500 346500 346500 346500
520000 520000 520000 520000 520000
582300 866500 866500 866500 866500
50000
582300 866500 866500 866500 916500
0.893 0.797 0.712 0.636 0.567
519910.7 690768.5 616757.6 550676.4 520046.7
675659.9
0 -100000
1 20000
2 40000
3 50000
4 20000
11.098%
-0.00 (Note: NPV at IRR will always be zero)
 1 1.05 1.1025 1.157625
-1 0 1 2
Last year Today

0.952380952380952 0.90702947845805
1.05 1.05
 1.21550625 24.310125
3 year 4 onwards

0.863837598531476 0.863837598531476
1.05 21 24.15

24.310125
22.05
24.15
Alternative 1
Year 1 2 3 4 5 6 7
Expetcted revenues 400000 400000 400000 350000 350000 350000 250000
Less: Operating costs -90000 -90000 -90000 -90000 -90000 -90000 -90000
Less: Maintanance costs -16000 -16000 -16000
 8 9 10
250000 250000 250000
-90000 -90000 -90000
-16000 -16000 -16000
 -3708.3
1 0.954381 727.4449 0.857186 623.5553
2 0.910842 727.4449 0.734767 534.5026
3 0.86929 727.4449 0.629832 458.1679
4 0.829634 727.4449 0.539883 392.735
5 0.791786 727.4449 0.46278 336.6468
6 0.755666 727.4449 0.396688 288.5688
7 0.721193 727.4449 0.340035 247.357
8 0.688292 727.4449 0.291473 212.0309
9 0.656893 727.4449 0.249847 181.7498
10 0.626926 727.4449 0.214165 155.7933 37083
11 0.598326 727.4449 0.183579 133.5438 3708.3 185.415
12 0.57103 912.8599 0.157361 143.649 0.57103 667.494 433.8711
8.974258 16.661% 3708.3 0.42897
8.974258
 727.4449
0

3522.885 293.5738

6528.278
105.8776
6634.156 1.789002

2925.856
 40400
969600 20% 193920 1 323200 293465.6 6060 287405.6
969600 32% 310272 2 323200 320226.6 6060 314166.6
969600 19.20% 186163.2 3 323200 291681.5 6060 285621.5
969600 11.52% 111697.9 4 323200 274554.5 480548.3
802053.1
167546.9
141400
26146.88
6013.782
147413.8
0.862069 247763.4
0.743163 233476.9
0.640658 182985.6
0.552291 265402.6
-969600
-40400
-80371.44
Smith 0 1 2 3 4
MACRS % 20% 32% 19.20% 11.52%
Unit Sales 5,450 5,450 6,200 6,200
Sale Price 815 839.45 864.63 890.57
VC 590 604.75 619.87 635.37
Investment -4,100,000.00
Salvage
NWC -444,175.00 -13,325.25 -78,572.52 -16,082.18 -16,564.65
Sales 4,441,750.00 4,575,002.50 5,360,727.70 5,521,549.53
VC -3,215,500.00 -3,295,887.50 -3,843,186.25 -3,939,265.91
FC -65,000.00 -66,300.00 -67,626.00 -68,978.52
Depreciation -820,000.00 -1,312,000.00 -787,200.00 -472,320.00
EBT 327,924.75 -177,757.52 646,633.27 1,024,420.46
Tax (36%) -118,052.91 63,992.71 -232,787.98 -368,791.36
Net Income 209,871.84 -113,764.81 413,845.29 655,629.09
Cash Flows -4,544,175.00 1,016,546.59 1,119,662.67 1,184,963.11 1,111,384.44
NPV 377,729.18
IRR 12.95%
MIRR 11.89%
PI 1.083

Payback 4.05
 5 0 1 2 3 4
11.52% Unit Sales 5,450 5,450 6,200 6,200
6,200 Sale Price 815 839.45 864.63 890.57
917.29 Sales 4441750 4575002.5 5360727.7 5521550
651.25 NWC -444,175.00 ### -78,572.52 -16,082.18 -16,564.65

189,000.00
568,719.60 0 1 2 3 4
5,687,196.02 Unit Sales 5,450 5,450 6,200 6,200
-4,037,747.55 Sale Price with 3% growth 815 839.45 864.63 890.57
-70,358.09 Less: VC with 2.5% growth -590 -604.75 -619.87 -635.37
-472,320.00 contribution per unit 225.00 234.70 244.76 255.21
1,675,489.97 Total contribution ### ### ### ###
-603,176.39 Less: Fixed cost with 2% growth -65000 -66300.00 -67626.00 -68978.52
1,072,313.58 Less: Depreciation ### ### ### ###
2,319,330.79 Earnings Before Tax ### -99,185.00 ### ###
Less: Taxes @36% ### 35,706.60 ### ###
Earnings after taxes ### -63,478.40 ### ###
Add: Depreciation (Non cash expense) ### ### ### ###
Incremental Operating cashflows ### ### ### ###

0 1 2 3 4
Total free cash flow (F -4,544,175.00 ### ### ### ###
PV factor @10.12% 1.00 0.91 0.82 0.75 0.68
PV of the cashflows -4,544,175.00 ### ### ### ###
NPV 217,084.63
PI 1.05
cumulative cashflows -4,544,175.00 ### ### ### -31,909.65
Payback 4.02
cumulative PV of the c -4,544,175.00 ### ### ### ###
Discounted Payback 4.82
IRR 11.814%
MIRR 11.1526%
 5
6,200
917.29
5687196
###

5
6,200
917.29 ###
-651.25 47,160.00 16977.6
266.04 205,977.60
###
-70358.09
###
###
###
###
###
###

5
###
0.62
###

###

###
1 0.934579439
2 0.873438728
3 0.816297877
4 0.762895212 3.387211 6401829.27472 2062326
5 0.712986179 1890000 2946179
4.100197436 8291829.27472
2952142.15388
712986.1795 9047857.84612
8334871.667 756028.57140
43042.39192

2.3965581931
240854.098407
Particulars Number of shares Paid till Date Notional call
A $1.00 Ordinary share 100000 80000 20000
B $1.00 Ordinary share 100000 36000 64000
200000 116000 84000
Cash Available ($52,000 - $6,000)
Notional Refund
 Forecasted Years
2020 2021 2022 2023
Sales growth rate 10.10% 9.60% 9.10% 8.60%
Operating costs as a % of sales 60.70% 60.40% 60.10% 59.80%
Growth in net fixed assets 8% 8% 8% 8%
Growth in NOWc 8% 8% 8% 8%
Depr'n as a % of Operating capital 6% 8% 7% 7%
Tax rate 40%
Wacc 10%
Long run FcF growth 6%
Market value of Debt and Preferred 300

Historical Forecasted Years

2019 2020 2021 2022 2023

Sales 3000 3,303.00 3,620.09 3,949.52 4,289.17

Operating costs 2616.2 2,004.92 2,186.53 2,373.66 2,564.93
Dep = Depreciation 100 116.64 167.96 158.72 171.42
EBIT 1,181.44 1,265.59 1,417.13 1,552.83
EBIT * (1 - T) 708.8634 759.3559 850.2799 931.6959
EBIT * (1 - T) + Dep 825.50 927.32 1,009.00 1,103.12

Net Fixed assets 1,000.00 1,080.00 1,166.40 1,259.71 1,360.49

Net Oper. Working capital (NOWc) 800.00 864.00 933.12 1,007.77 1,088.39
Total Operating capital 1,800.00 1,944.00 2,099.52 2,267.48 2,448.88
Net capex = change in net fixed assets 130.00 80.00 86.40 93.31 100.78
Net capex + Dep 196.64 254.36 252.04 272.20
Delta NOWc 64.00 69.12 74.65 80.62

FcF = EBIT(1-T) + Dep - capex 745.50 840.92 915.69 1,002.34

Free cash flow at 2024 1,091.91

Horizon value at 2024 28935.57
PV of HV 17966.71

calculation of Firm's intrinsic value

Sum of PV's of FcF from 2020-2024 3423.277
PV of HV 17966.71
Total corporate value 21389.99
Less: Marketvalue of Debt and Preferred -300
Intrinsic value of common equity 21089.99
Shares outstanding (millions) 100 Not given in the screenshot which student attached. Hence I assume

Intrinsic value Per share 210.8999

ears
2024
8.10%
59.50%
8%
8%
7%

ears
2024

4,636.60
2,758.78
185.14
1,692.69
1015.612
1,200.75

1,469.33
1,175.46
2,644.79
108.84
293.97
87.07

1,091.91

attached. Hence I assumed as 100 million shares

 1 0.950209
2 0.902897
5.24% 3 0.857941
0.600056 4 0.815223 2% 3% 3%
191314.6 5 0.774633 102% 103% 103%
318828 6 0.736063 0.672971 0.610271 0.553676
7 0.699414 0.327029 0.389729 0.446324
8 0.664589 16.35143 15.58916 14.87747
9 0.631499 40.87858 38.97291 37.19369
10 0.600056 67.29713 61.02709 55.36758
108.1757 100 92.56126

Portfolio RDeviation Square of Deviations

2015 18.40% 2.400% 0.058%
2016 17.20% 1.200% 0.014%
2017 16.80% 0.800% 0.006%
2018 16% 0.000% 0.000%
2019 14.80% -1.200% 0.014%
2020 12.80% -3.200% 0.102%
Sum of Square of Deviations 0.195%
Variane = Sum of square of deviations / 6 years
0.033%
Standard deviation = Square root of Variane
1.804%
Deviation from Average return Square of Deviations
Year OGDcL PTcL OGDcL DeviPTcL DeviaProdut of DOGDcL PTcL
2015 16% 20% -2.00% 5% -0.1067% 0.0400% 0.2844%
2016 16% 18% -2.00% 3% -0.0667% 0.0400% 0.1111%
2017 18% 16% 0.00% 1% 0.0000% 0.0000% 0.0178%
2018 19% 14% 1.00% -1% -0.0067% 0.0100% 0.0044%
2019 19% 12% 1.00% -3% -0.0267% 0.0100% 0.0711%
2020 20% 8% 2.00% -7% -0.1333% 0.0400% 0.4444%
Average re 18% 15%
sum of Produt of deviations -0.3400% 0.1400% 0.9333%
covariance = Sum of product of deviations/6 years -0.0567% 0.0233% 0.1556%
1.528% 3.944%
-0.940582
 5 5
10 7

8% 9% 7%
108% 109% 107%
0.463193 0.422411 0.508349 25.41746
0.536807 0.577589 0.491651
6.710081 6.417658 7.023582
33.55041 32.08829 35.11791
46.31935 42.24108 50.83493
79.86976 74.32937 85.95284

0.930632
6.94%
 Portfolio Return Deviation from mean Square of Deviations
2015 8.00% 2.000% 0.040%
2016 -7.00% -13.000% 1.690%
2017 12.00% 6.000% 0.360%
2018 11% 5.000% 0.250%
Mean = 6.00%

Sum of Square of Deviations 2.340%

Variane = Sum of square of deviations / 6 years 0.780%
Standard deviation = Square root of Variane 8.8318%

Deviation from Average return

Year OGDL PTL OGDL Deviations
2015 16% 20% 16.00%
2016 16% 18% 16.00%
2017 18% 16% 18.00%
2018 19% 14% 19.00%
2019 19% 12% 19.00%
2020 20% 8% 20.00%
Average re 18% 15%
sum of Produt of deviations
covariance = Sum of product of deviations/6 years
 1.47

viation from Average return Square of Deviations

PTcL Deviations Produt of Deviations OGDcL PTcL
20% 3.2000% 2.5600% 4.0000%
18% 2.8800% 2.5600% 3.2400%
16% 2.8800% 3.2400% 2.5600%
14% 2.6600% 3.6100% 1.9600%
12% 2.2800% 3.6100% 1.4400%
8% 1.6000% 4.0000% 0.6400%

15.5000% 19.5800% 13.8400%

ns/6 years 2.5833% 3.2633% 2.3067%
18.065% 15.188%
0.9415801827
 Activity cost cost Driver
Regular Deluxe Total Driver units
Administration 25126 4400 2500 6900
Quality Inspection 227060 5 35 40
Machine Set up 171180 15 45 60
Machine hours worked 124350 3960 3000 6960

Regular Allocated cost

Administration 4400 16022.38
Quality Inspection 5 28382.5
Machine Set up 15 42795
Machine hours worked 3960 70750.86
157950.7
€ 35.90
Activity cost per cost Driver Unit

3.641449
5676.5
2853
17.86638
 1.2 1.6610806449
0.000000000000 3% 13.842338707
0.000000000000 15%

8340000
0.02387 349392542.94
0.02494 334402566.16
14989976.782
0.02387 349392542.94 0.02387 349392542.94 0.02463 338611449.45
0.02463 338611449.45 0.02304 361979166.67 0.02494 334402566.16
10781093.489 -12586623.726 4208883.2931
Scenario Rate of Return Expected Return Deviation from Expected return
1 2 3=2-1
Recession 6% 8% 2%
Normal 8% 8% 0%
Boom 12% 8% -4%
Total of Squared deviation * Probability
Standard Deviation
coefficient of Variation
Range
 Squared Deviation Probability Squared Deviation * Probability
4=3*3 5 4*5
0.04000% 0.25 0.0100%
0.0000% 0.5 0.0000%
0.1600% 0.25 0.0400%
ability 0.0500%
1.291%
 Probability Lozada Probability * Return
0.05 -10% -0.500%
0.25 5% 1.250%
0.4 20% 8.000%
0.25 30% 7.500%
0.05 40% 2.000%
Expected return 18.250%
Standard deviation = Squareroot of [sum of square of deviations/5]

Probability Soppie Probability * Return

0.05 0% 0.000%
0.25 5% 1.250%
0.4 16% 6.400%
0.25 24% 6.000%
0.05 32% 1.600%
Expected return 15.250%
Standard deviation = Squareroot of [sum of square of deviations/5]
Square of deviations from expected return
3.516%
2.890%
1.051%
1.156%
2.641%

15.002%

Square of deviations from expected return

2.326%
1.960%
0.783%
0.856%
1.863%

12.480%
Outstanding Bonds 2200
Market PriCe of Bond 1188
FaCe value 1000
Floatation Costs 0.025
Coupon 0.055
Time in Years 25
Time in quarters 100
Tax rate 0.4

cost of Debt before tax per quarter 1.068%

cost of Debt before tax per annum 4.273%
After tax cost of Debt 2.564%

Book value of Debt 2200000

Weight of Bond according to Book value 84.7784%

Weighted Average cost of capital 3.2842%

Number of preferenCe stoCks 6000
Market priCe of PreferenCe stoCk 38
PreferenCe stoCk dividend 0.7
Par value of preferenCe stoCk 20

cost of Preference share 1.842%

Book value of Preference capital 120000

Weight of Preference capital according to Book value 4.6243%
Market priCe of Common stoCk 32
Undervalued amount 1.5
outstanding Common shares 55000
Par value of Common stoCk 5
Dividend 2
growth rate 0.035

Expected Dividend 2.07

Adjusted Market price 33.5
cost of equity 9.679%

Book value of Equity capital 275000

Weight of Equity capital according to Book value 10.5973%
Outstanding Bonds 50000
Market PriCe of Bond
FaCe value 100
Floatation Costs 4%
Coupon 8%
Time in Years
Time in quarters
Tax rate 30%

After tax cost of Debt 8.400%

Weight of Bond according to Book value 30.0000%

Weighted Average cost of capital 14.1520%

2.5200%
###
14.1520%
Number of preferenCe stoCks
Market priCe of PreferenCe stoCk 115.5
PreferenCe stoCk dividend 7.50%
Par value of preferenCe stoCk 100
Floatatio costs 10%

cost of Preference share 16.494%

Weight of Preference capital according to Book value 20.0000%

3.2987%
Market priCe of Common stoCk 40

outstanding Common shares 3000000

Floatation costs 10%
Dividend 3.5
growth rate 5%
Next year net income 14000000

Expected Dividend 4.6667

cost of equity 16.67%

Weight of Equity capital according to Book value 50.0000%

8.3333%
6.083333 1.04599
4.65% 6.083333
104.65% 1.314597
1.318501 0.314597
0.318501
Year 1 2
Expected sales in units 1200000 3500000
Sales Price per unit $ 200 $ 200
Less: Production, distribution, and overhead costs $ -120 $ -120
contribution per unit $ 80 $ 80
Total contribution = Sales units * contribution $ 96,000,000 $ 280,000,000
FV factor @15% 1.74900625 1.520875
Future value of contribution $ 167,904,600.00 $ 425,845,000.00
Sum of FV of contribution $ 1,439,199,600.00
Future value of $500 million = $500 million * 2.01136 $ 1,005,678,593.75
Future worth = Total FV - FV of $500 million $ 433,521,006.25

2.0113571875
 3 4 5
7000000 5000000 3000000
$ 180 $ 160 $ 140
$ -120 $ -120 $ -120
$ 60 $ 40 $ 20
$ 420,000,000 $ 200,000,000 $ 60,000,000
1.3225 1.15 1
$ 555,450,000.00 $ 230,000,000.00 $ 60,000,000.00
cost of home 180000
Down Payment = 10% * 180000 18000
Mortgage amount = cost of home - Down payment 162000
Interest rate 7%
Tenure of mortgage 25
PV factor annuity @9% for 20 years = [1-(1+7%)^-25]/7% 11.65358
Annual installments = Mortgage amount / PV factor annuity 13901.3
Total amount paid to banker = Annual installments * 25 years + Down payment 365532.6
Interest amount paid = Total amount paid - cost of home 185532.6

8% 6%
108% 106%
630483.40993178 0.315242 0.417265
0.684758 0.582735
427973.934396319 8.559479 9.712249
1058457.3443281
 0 -4500
1 35 4.291871 78112.87
2 35 4.048935 73691.39
4500 3 35 3.81975 69520.18
0% 0% 4 35 3.603537 65585.07
120 5 35 3.399564 61872.71
118.7982 4157.936 6 35 3.207135 58370.48
7 35 3.0256 55066.49
37.87937 8 35 2.854339 51949.52
9 35 2.692773 49008.98
10 35 2.540352 46234.89
11 35 2.396558 43617.82
12 35 2.260904 41148.89
13 35 2.132928 38819.7
4.291871 3.291871 14 35 2.012196 36622.36
58.15638 15 35 1.898299 34549.4
16 35 1.790848 32593.77
18200.19 17 35 1.689479 30748.84
18 35 1.593848 29008.34
19 35 1.50363 27366.36
20 35 1.418519 25817.32
21 35 1.338226 24355.96
22 35 1.262477 22977.32
23 35 1.191016 21676.72
24 35 1.1236 20449.74
25 35 1.06 19292.2
26 35
27 35
28 35
29 35
30 35
31 35
32 35
33 35
34 35
35 35
36 35
37 35
38 35
39 35
40 35
41 35
42 35
43 35
44 35
45 35
46 35
47 35
48 35
49 35
50 35
51 35
52 35
53 35
54 35
55 35
56 35
57 35
58 35
59 35
60 35
61 35
62 35
63 35
64 35
65 35
66 35
67 35
68 35
69 35
70 35
71 35
72 35
73 35
74 35
75 35
76 35
77 35
78 35
79 35
80 35
81 35
82 35
83 35
84 35
85 35
86 35
87 35
88 35
89 35
 90 35
91 35
92 35
93 35
94 35
95 35
96 35
97 35
98 35
99 35
100 35
101 35
102 35
103 35
104 35
105 35
106 35
107 35
108 35
109 35
110 35
111 35
112 35
113 35
114 35
115 35
116 35
117 35
118 35
119 35
120 35
-0.113%
Stock Number ofPrice per s Market valuWeight of each stock
Able 120 1 120 0.125984 2.040945 0.015872
Baker 95 1.5 142.5 0.149606 3.680315 0.022382
charlie 230 3 690 0.724409 16.51654 0.524769
952.5 1 22.2378
1.46 0.023173 0.070492
8.54 0.191143 0.225423
2.89 1.516583 0.264666
1.730898 0.56058 2.291479
1.513763
 4 6 13
100 100 100
4.90% 4.90% 4.90%
0.825844 0.750494 0.536931 3.60%
82.58441 75.04937 53.69312 103.60%
1.100401 1.100401 1.100401 0.852867
0.011004 0.012109 0.016925 1876306
20 42 182
18.17519 38.1679 165.3943
MARR 15%

Year Market Value Operating Cost Present value EUAC

0 110000
1 90000 20,000.00 49,130.43 56,500.00
2 70000 21,400.00 90,642.72 55,755.81
3 50000 22,898.00 125,752.77 55,076.82
4 30000 24,500.86 155,484.43 54,460.81
5 10000 26,215.92 180,699.21 53,905.38
6 0 28,051.03 197,798.21 52,265.59
7 0 30,014.61 209,081.82 50,254.98
8 0 32,115.63 219,580.47 48,933.53
9 0 34,363.72 229,348.79 48,065.55
10 0 36,769.18 238,437.57 47,509.18
11 0 39,343.03 246,894.08 47,173.80
12 0 42,097.04 254,762.32 46,998.75
13 0 45,043.83 262,083.20 46,941.84
14 0 48,196.90 268,894.81 46,972.83
15 0 51,570.68 275,232.56 47,069.46
16 0 55,180.63 281,129.43 47,215.04
17 0 59,043.27 286,616.07 47,396.80
18 0 63,176.30 291,721.04 47,604.87
19 0 67,598.65 296,470.88 47,831.53
20 0 72,330.55 300,890.30 48,070.68
21 0 77,393.69 305,002.28 48,317.48
22 0 82,811.25 308,828.21 48,568.11
Order size 75%
Payment in current quarter 66.67%
Payment in next quarter 33.33%
collections in current quarter 33.33%
collections in next quarter 66.67%
Sales in previous quarter $ 348
Labor and admin costs $ 77 per quarter
Interest on long term loan $ 52 per quarter
Beginning cash balance $ 40
Minimum cash balance $ 30
Borrowing limit $ 348
Interest rate 2% per quarter

Solution
A. cash requirements 1st quarter 2nd quarter 3rd quarter 4th quarter
cash required for operations $ 34.67 $ -16.67 $ 66.00 $ 62.00
Interest on bank loan $ - $ 0.49 $ 0.17 $ 1.49
Total cash required $ 34.67 $ -16.17 $ 66.17 $ 63.49

B. cash raised in quarter

Line of credit $ 24.67 $ - $ 66.17 $ 63.49
Total cash raised $ 24.67 $ - $ 66.17 $ 63.49

c. Repayments of bank loan $ - $ 16.17 $ - $ -

D. Additions to cash balance $ - $ - $ - $ -

E. Line of credit
Beginning of quarter $ - $ 24.67 $ 8.49 $ 74.66
Ending of the quarter $ 24.67 $ 8.49 $ 74.66 $ 138.16
 current year following year
First Quarter 2nd quarter 3rd quarter 4th quarter 1st quarter
Sales Forecast $ 436 $ 348 $ 348 $ 396 $ 396
Purchases made $ 261 $ 261 $ 297 $ 297

Working Note - 1
cash collections from sales
First Quarter 2nd quarter 3rd quarter 4th quarter
collection related to quarter $ 145.33 $ 116.00 $ 116.00 $ 132.00
collection related to previous $ 232.00 $ 290.67 $ 232.00 $ 232.00
Total collections from sales $ 377.33 $ 406.67 $ 348.00 $ 364.00

Working Note - 2
cash payments made for purchases
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Payments for purchases in cu $ 174.00 $ 174.00 $ 198.00 $ 198.00
Payments for purchases in pr $ 109.00 $ 87.00 $ 87.00 $ 99.00
Total cash payment to supplie $ 283.00 $ 261.00 $ 285.00 $ 297.00

Working Note - 3
cash Budget
1st 2nd 3rd 4th
Sources of cash
Total collections from sales $ 377.33 $ 406.67 $ 348.00 $ 364.00
Disbursement of cash
Total cash payment to supplie$ -283.00 $ -261.00 $ -285.00 $ -297.00
Labor and admin costs $ -77 $ -77 $ -77 $ -77
Interest on long term loan $ -52 $ -52 $ -52 $ -52
Net cash inflow $ -34.67 $ 16.67 $ -66.00 $ -62.00

Working Note 4
credit line borrowing amount
1st 2nd 3rd 4th
Opening cash balance $ 40.00 $ 30.00 $ 30.00 $ 30.00
Add: Net cash inflow $ -34.67 $ 16.67 $ -66.00 $ -62.00
Less: Interest on credit line $ - $ -0.49 $ -0.17 $ -1.49
cash available at end of quart $ 5.33 $ 46.17 $ -36.17 $ -33.49
Minimum cash balance requi $ 30.00 $ 30.00 $ 30.00 $ 30.00
Loan borrowed through credit $ 24.67 $ - $ 66.17 $ 63.49
Repayment of bank loan throu$ - $ -16.17 $ - $ -
Ending cash balance $ 30.00 $ 30.00 $ 30.00 $ 30.00
Ending Loan balance $ 24.67 $ 8.49 $ 74.66 $ 138.16
 Alternative First transportation Option
Miles Total Revenue (A) Non-land Production cost (B) Freight cost per mile (c )
0 $ 30,000 $ 4,000 $ -
1 $ 30,000 $ 4,000 $ 2,000
2 $ 30,000 $ 4,000 $ 4,000
3 $ 30,000 $ 4,000 $ 6,000
4 $ 30,000 $ 4,000 $ 8,000
5 $ 30,000 $ 4,000 $ 10,000
6 $ 30,000 $ 4,000 $ 12,000
7 $ 30,000 $ 4,000 $ 14,000
8 $ 30,000 $ 4,000 $ 16,000
9 $ 30,000 $ 4,000 $ 18,000
10 $ 30,000 $ 4,000 $ 20,000
11 $ 30,000 $ 4,000 $ 22,000
12 $ 30,000 $ 4,000 $ 24,000
13 $ 30,000 $ 4,000 $ 26,000
Bid Rent (A - B - c)
$ 26,000
$ 24,000
$ 22,000
$ 20,000
$ 18,000
$ 16,000
$ 14,000
$ 12,000
$ 10,000
$ 8,000
$ 6,000
$ 4,000 Second Transportation Option
$ 2,000 Miles Total Revenue (A) Non-land Production cost (B) Monthly fixed costs
$ - 0 $ 30,000 $ 4,000 $ 8,000
1 $ 30,000 $ 4,000 $ 8,000
2 $ 30,000 $ 4,000 $ 8,000
3 $ 30,000 $ 4,000 $ 8,000
4 $ 30,000 $ 4,000 $ 8,000
5 $ 30,000 $ 4,000 $ 8,000
6 $ 30,000 $ 4,000 $ 8,000
7 $ 30,000 $ 4,000 $ 8,000
8 $ 30,000 $ 4,000 $ 8,000
Bid Rent (A - B - c)
$ 18,000
$ 18,000
$ 18,000
$ 18,000
$ 18,000
$ 18,000
$ 18,000
$ 18,000
$ 18,000
Spot Price on maStrike Price call option Exercised or lapsed Payoff to investor
$ 25.00 $ 30.00 $ 2.00 Lapsed $ -2.00
$ 26.00 $ 30.00 $ 2.00 Lapsed $ -2.00
$ 27.00 $ 30.00 $ 2.00 Lapsed $ -2.00
$ 28.00 $ 30.00 $ 2.00 Lapsed $ -2.00
$ 29.00 $ 30.00 $ 2.00 Lapsed $ -2.00
$ 30.00 $ 30.00 $ 2.00 Lapsed $ -2.00
$ 31.00 $ 30.00 $ 2.00 Exercised $ -1.00
$ 32.00 $ 30.00 $ 2.00 Exercised $ -
$ 33.00 $ 30.00 $ 2.00 Exercised $ 1.00
$ 34.00 $ 30.00 $ 2.00 Exercised $ 2.00
$ 35.00 $ 30.00 $ 2.00 Exercised $ 3.00
$ 36.00 $ 30.00 $ 2.00 Exercised $ 4.00
$ 37.00 $ 30.00 $ 2.00 Exercised $ 5.00
$ 38.00 $ 30.00 $ 2.00 Exercised $ 6.00
$ 39.00 $ 30.00 $ 2.00 Exercised $ 7.00
$ 40.00 $ 30.00 $ 2.00 Exercised $ 8.00
Land 300000
Equipment 32000
Less: Accumulated Depreciation -30000

5% 7%
cash 10000 17 17
Bank 42000 0.436297 2.292018
Accounts receivable 62000 0.563703 1.292018
Investment Securities 5000 11.27407 25.84037
Prepayment 18800 15965.85 6965.846
Inventories 50000
Other reserved 40000
227800 79730

Long term Financing 66000

Notes Payables 23500
Mortgage Loan 44000
Bond 188000

Accrued Expenses 35000

Accounts Payable 51000
Tax payable 25500
111500

common Stock 41000

Preferred Stock 46200
Retained earnings 90000
 1 6965.846 15205.57
2 6965.846 14481.49
3 6965.846 13791.9
4 6965.846 13135.14
5 6965.846 12509.66
6 6965.846 11913.96
3.158815 7 6965.846 11346.63
2.158815 8 6965.846 10806.31
30.84022 9 6965.846 10291.73
5836.535 1129.311 10 6965.846 9801.644
11 6965.846 9334.899
12 6965.846 8890.38
13 6965.846 8467.029
14 6965.846 8063.837
15 6965.846 7679.845
16 6965.846 7314.138
17 6965.846 6965.846
180000
Item Current Year PreviousHorizontal Vertical Analysis
Current Assets 9255980993 8E+09 117.41% 59.100%
Assets 15661678159 1E+10 111.13% ###
Current Liabilities 6077675750 5E+09 122.97% 38.806%
Total Liabilities 12690569412 1E+10 117.23% 81.029%
Retained Earnings / (Defi 1536482182 2E+09 94.76% 9.810%
Stakeholders Equity 2971108747 3E+09 90.91% 18.971%
Stakeholders Equity - Pa 2958283836 3E+09 91.28% 18.889%
Book value per share 2.08 2.29 90.83%

Item Current Year PreviousHorizontal Vertical Analysis

Gross Revenue 14117067433 2E+10 92.81% 100.00%
Gross Expense 13326577138 1E+10 95.67% 94.40%
Income / (Loss) Before T 387672212 8E+08 46.38% 2.75%
Net Income / (Loss) after 201215610 5E+08 42.29% 1.43%
Net Income / (Loss) Attr 200283516 5E+08 40.50% 1.42%
Earnings / (Loss) Per Sha 0.14 0.35 40.00%
Earnings / (Loss) Per Sha 0.14 0.35 40.00%
 Security 1 B Security 2 BWeight in SePortfolio BetFormula used
Case 1 0.5 1.5 0.4 1.1 (0.5*0.4)+(1.5*(1-0.4)) 1.1
Case 2 1.95 0.65 0.5 1.3 1.3 - (0.65*(1-0.5)) / 0.5 1.3
2.1 = w*1.1 +
1.9*(1-w)
2.1 = 1.9 -
Case 3 1.1 1.9 -0.25 2.1 0.8w
0.8w = -0.2
w = -0.2/0.8
w = -0.25 2.1
Case 4 1.25 0.8 0.75 1.1375 (1.25*0.8)+(0.8*(1-0.75)) 1.1375
Case 5 1.3 3.425 0.2 3 3 - (1.3*0.2) / (1-0.2) 3
cashflows Project A Project B
Year 0 $ -37,500 $ -37,500
Year 1 $ 17,300 $ 5,700
Year 2 $ 16,200 $ 12,900
Year 3 $ 13,800 $ 16,300
Year 4 $ 7,600 $ 27,500
IRR 19.71% 18.76%
Question 1
Rate 5.35%
Years 8
callable at canada bond + 0.12%
But credit spread over canada bonds 0.32%
Therefore rate= 5.35% + 0.12% + 0.3 5.7900%

coupon payment 53.5

FV 1000
call price $ 972.45

Question 2
Balance years after 4 ye 4 Question 3
YTM 4.85% YTM 4.85%
cannada bonds yield Years 4
callable at canada bonds + 0.12% coupon payme 53.5
Therefore rate = 4.75% 4.870% FV 1000
current price $ 1,017.79
coupon payment 53.5 Now the current price id Greater than the call price. The com
FV 1000
call price $ 1,017.07
n the call price. The company can consider calling the honda
Input Output
Loan Amount 365000 Periodical Rat 0.26%
contractual rate 3.125% Total # of con 180
Payments per ye 12 Total Mortgag 2,542.62
Loan Term (Year 15 Pre-tax effect 0.0352%
Ballon Ending B 0 After tax effe 0.0281%
Fees/Discount P 2
Prepayment Pen 0
Marginal Income 20%
Prepay at the en 120

Period Begenning Total PaymentsInterest co Principal com Income Tax saAfter tax Effect Ending Balance
1 365000 -2,542.62 -950.52 -1,592.10 190.10 2,352.52 ###
Ending Balance
1.50%
60%
0.36
18.00%
0.005 0.25
18.50% 0.5
0.3

-0.223144
0.04625 3.141593
-0.176894 6.283185
0.277714 -0.589645 0.347681 2.506628
0.277714 0.173841

0.25
0.5
 1.030455 1.4 0.970446
0.280455 0.65
0.431469 15.87804 15.40877
0.568531 6.648401
1.189866 6.451911

8.956863
90.23862 0.279902
0.013186
Year cash fows PV factor @15% PV of the ccumulative cash flows
0 -50000 1 -50000 -50000
1 25000 0.869565217391 21739.13 -28260.87
2 25000 0.756143667297 18903.59 -9357.278
3 25000 0.657516232432 16437.91 7080.628 0.56925
4 25000 0.571753245593 14293.83 21374.46
5 29000 0.497176735298 14418.13 35792.58
41.888%
6% 11236
0.005
0.882772
0.117228
24.44564
11236
459.6321
 1.1236

₹ -459.63
4.485%