1.

Extend the spreadsheet to find net capital spending for each year. What is NCS for 2025 (in $ million)?

2.

Extend the spreadsheet to find the change in net working capital for each year. What is the change in net working capital for 2025 (in $ million)?

3.

Create a new tab in Excel for cost of capital calculations. Name it 'WACC'. What is Apple's cost of equity? Cost of debt before tax? WACC?

4.

What is the present value of all cash flows after 2025 expressed in 2025 dollars (the terminal value, TV) (in $ million)? Add the terminal value to your spreadsheet.

Intro It is the end of 2020. You're a financial analyst working for Apple. The company is considering producing a new wearable television set and is predicting the following sales (in $ million). Assume all cash flows occur at the end of the year. A B C D E F 2021 2022 2023 2024 2025 70 91 109.2 | 120.12 | 120.72 2 Sales After 2024, sales are expected to grow by 0.5% forever. COGS and SG&A are expected to add up to 60% of sales and depreciation is expected to be 10% of sales. To start production at the beginning of 2021, Apple has to invest $100 million now to build a new factory. After 2021, the factory needs to be expanded to maintain the same fixed asset turnover (saleset fixed assets) as in 2021. Net working capital consists mainly of inventory of electronics components, minus some current liabilities. Net working capital is expected to be always 30% of sales. Apple has a beta of 0.75. Its target capital structure weight for equity is 95% and the expected return on the S&P 500 is 5.5%. The average yield on its bonds is 6%, while the yield on Treasury bonds is 2%. Apple's marginal tax rate is 23%. Intro It is the end of 2020. You're a financial analyst working for Apple. The company is considering producing a new wearable television set and is predicting the following sales (in $ million). Assume all cash flows occur at the end of the year. A B C D E F 2021 2022 2023 2024 2025 70 91 109.2 | 120.12 | 120.72 2 Sales After 2024, sales are expected to grow by 0.5% forever. COGS and SG&A are expected to add up to 60% of sales and depreciation is expected to be 10% of sales. To start production at the beginning of 2021, Apple has to invest $100 million now to build a new factory. After 2021, the factory needs to be expanded to maintain the same fixed asset turnover (saleset fixed assets) as in 2021. Net working capital consists mainly of inventory of electronics components, minus some current liabilities. Net working capital is expected to be always 30% of sales. Apple has a beta of 0.75. Its target capital structure weight for equity is 95% and the expected return on the S&P 500 is 5.5%. The average yield on its bonds is 6%, while the yield on Treasury bonds is 2%. Apple's marginal tax rate is 23%