CF (Sec.

EFGH)

Roll No. PGP/25/394

Name Keshav Sureka

1
Credit sales
Production cost
Inventory turnover
Inventory
Collection period
Receivables turnover
Receivables

Initial outflow (apart from initial investment)

2 Earnings
Required rate
Equity value
Total shares outstnading
Per share price
Dividends
Shares bought back
Shares remainig

3 Assuming cashflows at time 0 are outflows

Tax
Discount rate
Monetary loss

4 Initial inv
EBITDA
Time
 Depn
Tax
Nominal disc
Cash flow every year
NPV
PV of inflows
(Real int rate) Discount rate used
Inflation

5 Expected payoff for debt

Int rate
Debt payment

6 beta
Equipment Cost
Prob of 0 rev
ASSUMPTION
Annual electrivity charges
Mkt value fo one coin
Equipment salvage
Rf
Rm

Cost of equity
NPV

7 ASSUMPTIOn
Dividend will be paid to holders on record on july 23rd
Ex divident date
Shares purchased before that
Divident per share
Total income

8 ku
d/v
kd
ke

9 Discount rate
PV of inflows
NPV
x
10 Ex
sd
beta

11 current operting cycle

decrease in receivable periods
decrease in inventory periods
decrease in payable periods

New cycle

12 ku
NPV
folating cost
life
debt
kd
tax

flotation cost per year

tax savings due to flotation cost per year
PV of total tax savings
Net flotation cost

ASSUMPTION

13 required return
rf
rm-rf
beta

New market premium

new required return

14
15 PV
market value
Bankruptcy cost

16 sd
new sd
change

17 beta1
req rtn1
rf
beta2

Rm-rf
req rtn2

18 earnings
equitty
shares
price per share
excess cash
number fo stocks repurchased
new number of shares
new EPS

19 real rf
inflation
nominal rf
rm
bteta
req rate

20 debt
debt rate
subsidised rate
time
tax
NPV
21 debt
coupn
Ytm

mkt value

BV
shares

shar eprice
Mkt value of equity
req rtn
tax
total capital
WACC

22 kd
total unleavered firm value
shares
tax
total value of debt
tax savings from debt

Total leavered firm value

new share price
shares repurchased

23

24 time
ASSUMpTION
ku
kd
ke
wacc
NPV

25 total cost
equity
Debt
external equity

Total debt to be raised

total equity to be raised

27 wacc
 debt
equity
post tax debt

cost of equity

29
 200000
110000
4
27500

8
25000
45

2500

1000
25%
4000
100
40
1000
25 -1
75
0 1 2 3
Super Excavato -57,000 -15,000 -17,000 -20,000
0.35 Tax savings from depreciation 6,650 6,650 6,650
15% Total after tax cashflow -3,100 -4,400 -6,350
₹ -18,406.67 Depreciation 19,000
NPV -67,198
Annuity equiva ₹ 29,431.14
Power Excavat -80,000 -10,000 -12,000 -13,000
Tax savings from depreciation 5,600 5,600 5,600
Total after tax cashflow -900 -2,200 -2,850
Depreciation 16,000
NPV -89,402
Annuity equiva ₹ 26,670.14

1125
317.5
5
 225
30%
12.50%
289.75
87.5
1212.5
6.243%
5.8891448874488%

27.5 Company does well Company does poorly

10% Earnings 60 Earnings 20
275 debt holde 35 debt holders 20

Prob 0.5 Prob 0.5

2 Cash flow Prob

10000 1000 0.6
0.6 31000 0.4
Annual electricity charges paid at the start of the year (since given that it is paid upfront)
1000
30000 Expected cashin 13000
1000 PV 10400
5%
15%

25.00%
-600

It takes t+2 days to for the delivery of the stocks

21st July
300
1.1
330

10%
60%
8%
13.00%

11% Projecct a
₹ 159,877.54 -x -x
35000 48000 36000
₹ 124,877.54 30000 18000
84000 96000
 48000 66000

Assuming 10%
Using goal 11%
PV of inflo ₹ 159,877.54 ₹ 159,877.54
Equating b ₹ -0.00

9.93% BOB BECKY combined

17.75% stock pertf 50000 60000 110000
0.981818181818182 % 0.454545455 0.5454545455 1
Ex 10.80% 9.20% 0.099272727
sd 25% 25% 0.177505674
beta 1.2 0.8 0.981818182

76.8
2.8
3.1 payable turnov 9 11.5
8.69565217391304 payable days 40 31.30434783

67.804347826087

15%
1.5
0.06
5
10
10%
34%

0.012
0.00408
₹ -0.02
₹ 0.044534

flotation cost is a part of debt and is stable in nature hence discounted at kd

14.50%
5.50%
4.50%
2.00

6.7500%
19.00%
 86.1363636363636 100 65
84 Expected p 94.75 0.85 0.15
2.13636363636363 PV 86.13636364

0.242981480775799 2017 48% 48%

0.201799900891948 2018 -12% 18%
0.0411815798838511 2019 42% -6%
2020 -6% -12%
2021 18% 42%
portfolio % 60% 40%

Variance 0.05904 0.05904

cov 0.02088 0.0407232

Total portf 0.0407232

1.4
14%
5.25%
1.56

6.2500%
15.0000%

900
6000
500
12
600
50
450
2

2.50%
4%
6.500%
9.75%
1.5
11.375%

1000000
5000000 initial int pay 600000
12% subsidised pa 450000
9% Pv of tax savin ₹ -341,701.80
4 savings per yea 150000
25% PV of savings p ₹ -455,602.40
₹ -797,304.20349
 50
8%
7%

55

65
20

8.25
165
10%
40%
220
0.0855

6%
6.3
0.3
25%
2.4
0.6

6.9
23
0.104347826086957

4
tax=0
8% -28
6% 18
10.0% ₹ 59.62 18
0.08 ₹ 31.62 18
₹ 31.62 18

200
70
130
42

135.416666666667
42.4242424242424
177.840909090909
205.840909090909
12.50%
 0.375
0.625
5.50%
10.437500%
0.167

0 15000 15000
1 16000 14545.454545
2 17000 14049.586777
3 19000 14274.981217
4 79500 54299.569702 57870.02254
63657.02479
10%
 4 5

-15,000 -17,000
5,600 5,600
-4,150 -5,450