UTS MANAJEMEN KEUANGAN LANJUTAN

Dosen Pengampu: Bpk. Atim Djazuli S.E., M.M.

Kelas : Manajemen Keuangan Lanjutan BA

Disusun Oleh :

Michael Krisnaputra Sondakh 205020200111045

PROGRAM STUDI MANAJEMEN

FAKULTAS EKONOMI DAN BISNIS

UNIVERSITAS BRAWIJAYA

MALANG

2022
RPS 1

(Question)

How is a project classification scheme (for example, replacement, expansion into new
markets, and so forth) used in the capital budgeting process?

How is a project classification scheme (for example, replacement, expansion into new markets,
and so forth) used in the capital budgeting process?

The capital budgeting used project classification schemes to formulate policies and help
consistency in project evaluation. It is used to:

- How much analysis is required to evaluate a particular project type

- The approving authority for such projects for investment within the firm

- The risk class for such project

- The cost of capital to be used to evaluate such project

Thus, it helps in consistency in project appraisals and approvals.

(Problem)

Project K has a cost of $52,125, its expected net cash inflows are $12,000 per year for 8
years, and its cost of capital is 12 percent. (Hint: Begin by constructing a time line.)
A. a. What is the project’s payback period (to the closest year)?
B. b. What is the project’s discounted payback period?
C. c. What is the project’s NPV?
D. d. What is the project’s IRR?
E. e. What is the project’s MIRR?

1
 A. $52,125/$12,000 = 4.3438, so the payback is about 4 years.
B. Project K's discounted payback period is calculated as follows:

Alternatively, since the annual cash flows are the same, one can divide $12,000 by 1.12 (the
discount rate = 12%) to arrive at CF1 and then continue to divide by 1.12 seven more times to
obtain the discounted cash flows (Column 3 values). The remainder of the analysis would be the
same.

C. NPV = -$52,125 + $12,000[(1/i)-(1/(i*(1+i)n)]

$52,125 + $12,000[(1/0.12)-(1/(0.12*(1+0.12)8)]

$52,125 + $12,000(4.9676) = $7,486.20.

Financial calculator: Input the appropriate cash flows into the cash flow register, input I =
12, and then solve for NPV = $7,486.68.

D. d. Financial calculator: Input the appropriate cash flows into the cash flow register and
then solve for IRR = 16%.

2
 E. MIRR: PV Costs = $52,125.

FV Inflows:

Financial calculator: Obtain the FVA by inputting N = 8, I = 12, PV = 0, PMT = 12000, and then
solve for FV = $147,596. The MIRR can be obtained by inputting N = 8,

PV = -52125, PMT = 0, FV = 147596, and then solving for I = 13.89%.

3
RPS 2
(Question)
Explain why sunk costs should not be included in a capital budgeting analysis, but
opportunity costs and externalities should be included

A sunk cost is an outlay related to the project that was incurred in the past and that
cannot be recovered in the future regardless of whether or not the project is accepted.
Therefore, sunk costs are not incremental costs and thus are not relevant in a capital budgeting
Analysis.
For example, that last year GPC spent $1,500 on a marketing and feasibility study for
the project. The $1,500 should not be included in the project's cost because that money already
has been spent and accepting or rejecting the project will not change that fact.
Opportunity costs are cash flows that company could have generated from assets the
company already own. Since a company has to give up those cash flows to implement other
projects, these cash flows should be included in capital budgeting. For example, suppose FedEx
already owns land with a current market value of $2 million that can be used for a new
distribution center. If FedEx goes forward with the project, only another $15 million will be
required, not the full $17 million, because it will not need to buy the required land.
Externalities are the effects of a project on other parts of the firm or on the
Environment. There are three types of externalities: negative within-firm externalities, positive
within-firm externalities, and environmental externalities. When a company introduces new
products it may affect the sales volume of other product offered by same company as well as
sales volume of its competitors. The lost cash flow should be included and adjusted on new
projects

4
(Problem)
Carter Air Lines is now in the terminal year of a project. The equipment originally
cost $20 million, of which 80 percent has been depreciated. Carter can sell the used
equipment today to another airline for $5 million, and its tax rate is 40 percent.
What is the equipment’s after-tax net salvage value?

Equipment ‘s original cost : 20.000.000

Depreciation (80%): 16.000.000
Book value: 4.000.000
Gain on sale = 5.000.000 - 4.000.000
= 1.000.000
Tax on gain = 1.000.000 (0,4)
= 400.000
AT net salvage value = 5.000.000 - 400.000
= 4.600.000

5
RPS 3
Question
Firms with relatively high nonfinancial fixed costs are said to have a high degree of what?
The use of cost structure of a company is knon as leverage. Operating leverage measure the
degree of change in operating income due to changes in the level of sales. The business risk
increases as there is a huge impact in EBIT due to a small decline in the level of sales. The geater
is the fixed cost in a cost structure leads to a great degree of operating leverage.

Problem

Pettit Printing Company has a total market value of $100 million, consisting of 1 million
shares selling for $50 per share and $50 million of 10 percent perpetual bonds now selling
at par. The company’s EBIT is $13.24 million, and its tax rate is 15 percent. Pettit can
change its capital structure by either increasing its debt to 70 percent (based on market
values) or decreasing it to 30 percent. If it decides to increase its use of leverage, it must call
its old bonds and issue new ones with a 12 percent coupon. If it decides to decrease its
leverage, it will call in its old bonds and replace them with new 8 percent coupon bonds.
The company will sell or repurchase stock at the new equilibrium price to complete the
capital structure change. The firm pays out all earnings as dividends; hence, its stock is a
zero growth stock. Its current cost of equity, rs, is 14 percent. If it increases leverage, rs will
be 16 percent. If it decreases leverage, rs will be 13 percent. What is the firm’s WACC and
total corporate value under each capital structure?

free cash flow

Calculate value of operation=
WACC
EBIT (1−tax rate)
¿
WACC
$ 13,240,000.00(1−0.15)
¿
11.14 %
$ 11,254,000.00
¿
11.14 %
= $101,023,339.30

6
Current WACC : 11.25%
Current Value of Operation : $ 100,035,555.60
WACC When leverage is increased : 11.94%
Value of Operation When Leverage is increased : $94,524,606.37
WACC When leverage is decreased : 11,14%
Value of Operation When Leverage is decreased : $101,023,339.30

7
RPS 4
(Question)
MM assumed that firms do not grow. How does positive growth change their conclusions
about the value of the levered firm and its cost of capital?
Positive growth changes the conclusions of Modigliani and Miller where they concluded that the
market value of the firm is affected by the future growth. If the firm expects high positive growth
in the future, the market value of that firm is higher and the stock prices are likely to be higher as
well. Where the investors do not anticipate any positive growth in the future, then the market
value of the firm will be low. Also Modigliani and Miller concluded that a firm that has higher
debt proportion in its capital structure is more valuable due to the tax shield that comes about
with the cost of debt. According to them, companies with higher proportion of debt have more
value since debt lowers the WACC.

(Problem)
Air Tampa has just been incorporated, and its board of directors is currently grappling
with the question of optimal capital structure. The company plans to offer commuter air
services between Tampa and smaller surrounding cities. Jaxair has been around for a few
years, and it has about the same basic business risk as Air Tampa would have. Jaxair’s
market-determined beta is 1.8, and it has a current market value debt ratio (total debt/total
assets) of 50 percent and a federal-plusstate tax rate of 40 percent. Air Tampa expects only
to be marginally profitable at startup; hence its tax rate would only be 25 percent. Air
Tampa’s owners expect that the total book and market value of the firm’s stock, if it uses
zero debt, would be $10 million. Air Tampa’s CFO believes that the MM and Hamada
formulas for the value of a levered firm and the levered firm’s cost of capital should be
used. These are given in Equations 16-4, 16-6, and 16-7.

a. Estimate the beta of an unlevered firm in the commuter airline business based
on Jaxair’s market-determined beta. (Hint: Jaxair’s market-determined beta is a levered
beta. Use Equation 16-7 and solve for bU.)

b. Now assume that rd rRF 10% and the market risk premium, RPM, is 5 percent.

8
Find the required rate of return on equity for an unlevered commuter airline.

c. Air Tampa is considering three capital structures: (1) $2 million debt, (2) $4
million debt, and (3) $6 million debt. Estimate Air Tampa’s rs for these debt
Levels.

d. Calculate Air Tampa’s rs at $6 million debt assuming its federal-plus-state tax

rate is now 40 percent. Compare this with your corresponding answer to part c. (Hint: The
increase in the tax rate causes VU to drop to $8 million.)

A. bL = bU [1 + (1 - T) (D/S)]
bU = bL/ [1 + (1 - T) (D/S)]

= 1.8/ [1 + (1 - 0.40) (0.5/0.5)] = 1.125

B. rsU = rRF + bU(RPM)

i. = 10% + 1.125(5%) = 15.625%
C. at $2 million debt
VL = VU + TD
VL = D + S => 10.5 = 2 + S
= 10 mill. + (2 mill x 0.25) = 10.5 mill. S = 8.5

rsL = rRF + bU(RPM) + bU(RPM)(1 – T)(D/S)

= 10% + 1.125(5%) + 1.125(5%)(1 – 0.25)(2/8.5) = 16.62%

Financial risk premium = rsL - rsU = 16.62% - 15.625% = 0.995%

at $4 million debt

VL = VU + TD
VL = D + S => 11 = 4 + S
= 10 mill. + (4 mill x 0.25) = 11 mill. S = 7

9
 rsL = rRF + bU(RPM) + bU(RPM)(1 – T)(D/S)
= 10% + 1.125(5%) + 1.125(5%)(1 – 0.25)(4/7) = 18.04%

Financial risk premium = rsL - rsU = 18.04% - 15.625% = 2.415% at $6 million debt

VL = VU + TD
VL = D + S => 11.5 = 6 + S
= 10 mill. + (6 mill x 0.25) = 11.5 mill. S = 5.5

rsL = rRF + bU(RPM) + bU(RPM)(1 – T)(D/S)

= 10% + 1.125(5%) + 1.125(5%)(1 – 0.25)(6/5.5) = 20.23%

Financial risk premium = rsL - rsU = 20.23% - 15.625% = 4.605%

D. VL = VU + TD VL = D + S => 10.4 = 6 + S
= 8 mill. + (6 mill x 0.4) = 10.4 mill. S = 4.4

rsL = rRF + bU(RPM) + bU(RPM)(1 – T)(D/S)

= 10% + 1.125(5%) + 1.125(5%)(1 – 0.40)(6/4.4) = 20.23%

Financial risk premium = rsL - rsU = 20.23% - 15.625% = 4.605% same as C.

10
RPS 5
Question
What is the difference between stock dividend and a stock split as a stockholder would you
prefer to see your company declare a 100% stock dividend or two for one split assume that
either action is feasible?

A stock dividend means dividend which is paid in the form of additional shares whereas stock
split is a division of issues shares in the ratio as decided by Company. In the Stock dividend,
additional shares are given to shareholders whereas in stock split already issued shares are split
in an agreed ratio.

Problem

Axel Telecommunications has a target capital structure that consists of 70 percent debt and
30 percent equity. The company anticipates that its capital budget for the upcoming year
will be $3,000,000. If Axel reports net income of $2,000,000 and it follows a residual
dividend payout policy, what will be its dividend payout ratio?

3,000,000 * .3 = 900,000

2,000,000 – 900,000 = 1,100,000

Div payout ratio= 1100000/2000000

11
RPS 6

Question

The SEC attempts to protect investors who are purchasing newly issued securities by
making sure that the information put out by a company and its investment banks is correct
and is not misleading. However, the SEC does not provide an opinion about the real value
of the securities; hence, an investor might pay too much for some new stock and
consequently lose heavily. Do you think the SEC should, as a part of every new stock or
bond offering, render an opinion to investors on the proper value of the securities being
offered? Explain.

No, the securities and exchange commission (SEC) can not render the proper value of securities
to the investors at the time of issue. The market value of the securities is driven by the market
factors such as demand and supply of securities in the market, presence of competitive firms,
phases of stock market, number and types of investors and changing environment of the issuing
company. Stock market is highly dynamic because of the changing factors and any professional
expert can not accurately analyse the market, its conditions and value of securities well in
advance.

Problem

Security Brokers Inc. specializes in underwriting new issues by small firms. On a recent
offering of Beedles Inc., the terms were as follows: Price to public $ 5 per share Number of
shares 3 million Proceeds to Beedles $14,000,000 3 The out-of-pocket expenses incurred by
Security Brokers in the design and distribution of the issue were $300,000. What profit or
loss would Security Brokers incur if the issue were sold to the public at an average price of
a. $5 per share?

b. $6 per share?

c. $4 per share?

12
solution $ 3.000.000

Number Of shares Proceeds to $ 14.000.000

beedles

Out of pocket exp $ 300.000

Partiucular $5 per share $6 per share $4 per share

Price Per Share $5 $ 6 $ 4

Revenue From Shares $ 15.000.000 $ 18.000.000 $ 12.000.000

Les : Proceeds to beedles $ 14.000.000 $ 14.000.000 $ 14.000.000

Less : out of pocket exp $ 300.000 $ 300.000 $ 3.300.000

Pofit (losss) $ 700.000 $3.700.000 $ -2.300.000

13
RPS 9

Question

Apakah saham preferen lebih seperti obligasi atau saham biasa? Jelaskan!

Saham preferen adalah jenis saham yang memberikan hak kepada pemiliknya untuk
menerima dividen yang lebih tinggi daripada saham biasa, tetapi biasanya tidak memiliki hak
suara yang sama seperti saham biasa.

aham preferen umumnya dianggap lebih seperti obligasi daripada saham biasa karena
memberikan tingkat dividen yang tetap kepada pemegangnya. Namun, saham preferen juga
memiliki karakteristik saham biasa karena nilainya bisa naik atau turun bergantung pada kondisi
pasar dan kinerja perusahaan. Jadi, saham preferen memiliki kombinasi karakteristik obligasi
dan saham biasa. No, the securities and exchange commission (SEC) can not render the proper
value of securities to the investors at the time of issue. The market value of the securities is
driven by the market factors such as demand and supply of securities in the market, presence of
competitive firms, phases of stock market, number and types of investors and changing
environment of the issuing company. Stock market is highly dynamic because of the changing
factors and any professional expert can not accurately analyse the market, its conditions and
value of securities well in advance.

Problem

Security Brokers Inc. specializes in underwriting new issues by small firms. On a recent
offering of Beedles Inc., the terms were as follows: Price to public $ 5 per share Number of
shares 3 million Proceeds to Beedles $14,000,000 3 The out-of-pocket expenses incurred by
Security Brokers in the design and distribution of the issue were $300,000. What profit or
loss would Security Brokers incur if the issue were sold to the public at an average price of
a. $5 per share?

b. $6 per share?

14
c. $4 per share?

15