Simplification

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RiskFreeRate 4% Practical Exercise you need to do
MarketReturns 10%
Beta 1.25 1. Do good practice of Name Manager. Go
Formula - Name Manager - Create from
CostofDebt 14% Selection
TaxRate 30%
EquityValue 125000
DebtValue 125000

Cost of Capital 10.65%

Cost of Capital 10.65%

Cost of Capital Use name Manager and solve this

xercise you need to do
practice of Name Manager. Go to
ame Manager - Create from
 Practical Exercise you need to do
Risk Free Rate 4%
Market Returns 10% 1. Do good practice of Name Manager. Formula - N
ERP #NAME? Use name Manager and solve this 2. Create this from scratch in your own spreadshee
Beta 1.25
3. Complete below excercise (use instructions) - N
Cost of Equity #NAME? Use name Manager and solve this - Complete the forecast using Names
- Highlight cells K23:L25 and create name for cells
- Complete "Next Year Sales"(L27) using Names
Cost of Debt 14% - Complete "Cost of Sales" (L28) using names
Tax Rate 30% - Reduce Cost of sales from Next year sales to get
Post Tax Cost of Debt #NAME? Use name Manager and solve this

Equity Value 125000

Debt Value 125000
Equity Funding #NAME? Use name Manager and solve this
Debt Funding #NAME? Use name Manager and solve this

Cost of Capital 10.65%

Cost of Capital 10.65%

Cost of Capital #NAME? Use name Manager and solve this

Cost of Capital #NAME? Use name Manager and solve this

l Exercise you need to do
od practice of Name Manager. Formula - Name Manager - Create from Selection

this from scratch in your own spreadsheet (repeat what I have done in video)
ete below excercise (use instructions) - NO SOLUTION PROVIDED FOR THIS - DIY
te the forecast using Names
ht cells K23:L25 and create name for cells L23, L24, and L25
te "Next Year Sales"(L27) using Names
te "Cost of Sales" (L28) using names
Cost of sales from Next year sales to get "Gross Profit" (L29)

Exercise
Current Sales 14,500.0
Sales Growth 10%
Gross Margin 60%

Next Year Sales

Cost of Sales
Gross Profit
D/E Ratio 25%
Coupon Rate 9.50%

D/E Ratio Risk Rating Coupon Rate

0% Baa2 9.50%
30% Baa3 9.75%
50% Ba1 12.25%
60% Ba2 13.75%

D/E Ratio 25%

Coupon Rate #### Use VLOOKUP to solve this - Approximate Match (1)

D/E Ratio Risk Rating Coupon Rate

0% Baa2 9.50%
30% Baa3 9.75%
50% Ba1 12.25%
60% Ba2 13.75%
Advanced Simplification
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Current Sales 14,500.0 Practical Exercise you need to do
Sales Growth 10.00%
1. Use goal seek function - Our goal here is
Gross Margin 60.00% at which gross profit will be 11,000
2. First select cell C12, the go to Data Menu
Next Year Sales 15,950.0 Seek
Cost of Sales -6,380.0
3. Ensure "Set cell" is set to C12 - this is the
Gross Profit 9,570.0 goal

4. Input 11000 in "To Value" - this is our go

5. Ensure "By Changing Value" is set to C7 -
change to achieve goal of 11000 gross profi
Exercise you need to do
l seek function - Our goal here is identify the Sales growth
ross profit will be 11,000
ect cell C12, the go to Data Menu - What if Analysis - Goal

"Set cell" is set to C12 - this is the cell where we set of our

1000 in "To Value" - this is our goal we want to achieve.

"By Changing Value" is set to C7 - this is what we want to
achieve goal of 11000 gross profit.
Current Sales 14,500.0 Practical Exercise you need to do
Sales Growth 10.00%
1. Ensure that data is cell C16 should be LINK
Gross Margin 60.00% and not pasted specially as values.
2. Select your data table B16:C25
Next Year Sales 15,950.0
Cost of Sales -6,380.0 3. Go to Data>What If Analysis>Data Table
Gross Profit 9,570.0 4. In "Column Input Cell" Select your input w
column. In this case, it is Sales growth, so we
5. Practice this multiple times.
Sales Growth Gross Profit
Exercise you need to do
that data is cell C16 should be LINKED with your calculation
asted specially as values.
our data table B16:C25

ata>What If Analysis>Data Table

mn Input Cell" Select your input which is mentioned in
n this case, it is Sales growth, so we will put $C$4. Press OK
this multiple times.
Current Sales 14,500.0 Practical Exercise
Sales Growth 10.00%
Watch video and
Gross Margin 60.00% that you have goo
inputs. It's popula
Next Year Sales 15,950.0
Cost of Sales -6,380.0
Gross Profit 9,570.0

Gross Margin

Sales Growth
Practical Exercise you need to do

Watch video and do it with me simultaneously. Its VERY IMP

that you have good hold on operating data tables with two
inputs. It's popularily known as Scenario Analysis.
Current Sales 14,500.0
Sales Growth 10.00%
Gross Margin 60.00%

Next Year Sales 15,950.0

Cost of Sales -6,380.0
Gross Profit 9,570.0
Practical Exercise you need to do
1. Go to Data> What if Analysis > Scenario Manager
2. Click on 'Add Scenario'

3. Name your Scenario (Worst Case/Base Case/Best Case); then

mention Input cells (C6:C8) in Changing Cells. Press OK

4. Now "Scenario Values" window will open. Input Current

Sales/Sales Growth Percent/Gross Margin as per cell selected. Press
Ok. The Scenario is now added in Scenario Manager.

5. Add remaining scenarios.

6. Once all scenarios are added, Open Scenario Manager - Press
'Summary' to get result of all scenarios. Keep report type as
"Scenario Summary"
Current Sales 14,500.0 Practical Exercise you need
Sales Growth 10.00%
1. Use Data Validation on cell C
Gross Margin 60.00% open the data validation - Alt+

2. Your Sales Growth rate shou

Next Year Sales 15,950.0 Validation - Settings Tab
Cost of Sales -6,380.0
3. On 'Input Message' tab, set
Gross Profit 9,570.0 "Sales growth generally ranges
box.

4. On the 'Error Alert' tab, set

message you want. For Eg - "R
lies between 0%-10%"
5. Once complete - Test it to en

6. Practice 'Circle Invalid Data'

sessions.
 ctical Exercise you need to do
Use Data Validation on cell C7 i.e. Sales growth percent input cell. To
n the data validation - Alt+A+V+V

our Sales Growth rate should be between 0 to 10% on Data

dation - Settings Tab
On 'Input Message' tab, set title as "Please Note:" and then type
es growth generally ranges between 0 to 10%" in 'Input Message'
.

On the 'Error Alert' tab, set the style to 'Warning' and type the error
ssage you want. For Eg - "Recheck Sales growth percent, historically it
between 0%-10%"
Once complete - Test it to ensure data validation is working properly.

ractice 'Circle Invalid Data' function once - We will use it in future

sions.
Current Sales 14,500.0 Practical Exercise you need
Sales Growth 10.00%
Watch video again and do it w
Gross Margin 60.00% excercise to ensure that no on

Next Year Sales 15,950.0

Cost of Sales -6,380.0
Gross Profit 9,570.0
ctical Exercise you need to do
tch video again and do it with me simultaneously. Its very important
ercise to ensure that no one can mess up with your model