1. Please consider the following company items: 2 points 30N Other items Tax rate 25 Marketnisk premium 6.5% Long term growth 30% Unlevered beta 0.80 Risk free rate 20% Long term ROCB 100% Target debt equity ratio 050 Smal firm premium 25% Bond rating BB Credit spread To estimate the beta of equity we can re-lever the unlevered beta with the Hamada formula. What is the re-levered beta of this company? Please round your calculation to one decimal place and use a period to indicate the decimal place (e.g. 2.1 instead of 2,1). Enter answer here 2. Please consider the following company items: 2 points Other items Tax rate Unlevered beta Target debt/equity ratio Bond rating 1.0% 8.0% 25% 0.70 0.50 BBB Market risk premium Risk free rate Small firm premium Credit spread debt 7.0% Long term growth 2.5% Long term ROCB 1.5% 2.0% What is the cost of equity of this company in percentages (%)? Please round your answer to one decimal place, use a period to indicate the decimal place and provide your answer without a percentage sign (e.g. 13.6 instead of 13.6%). Enter answer here 3. Please consider the following company items: 2 points Other items Tax rate Unlevered beta Target debt/equity ratio Bond rating 25% 0.60 0.30 BBB Market risk premium Risk free rate Small firm premium Credit spread debt 6.0% 3.0% 2.0% 1.5% Long term growth Long term ROCB 2.0% 9.0% What is the cost of debt of this company in percentages (%)? Please round your answer to one decimal place, use a period to indicate the decimal place and provide your answer without a percentage sign (e.g. 13.6 instead of 13.6%). Enter answer here 4. Please consider the following company items: 2 points Other items Taxate 25% Market risk premium 6.5% Long term growth 3.0% Unlevered beta 0.80 Risk free rate 20% Long term ROCB 100% Target debtlequity ratio 0.50 Smal firm premium 25% Bond rating BB Credit spread debt 30% What is the weighted Average Cost of Capital (or WACC) of this company in percentages (%)? Please round your answer to one decimal place, use a period to indicate the decimal place and provide your answer without a percentage sign (e.g. 13.6 instead of 13.6%). Enter answer here 5. Please consider the following company financials: 2 points Amounts in min dollars 31-12-18 actuals 31-12-19 forecast 31-12-20 forecast 31-12-21 forecast 31-12-22 31-12-23 forecast forecast 31-12-24 forecast 208 276 208 290 208 301 208 310 Balance sheet Goodwill Tangible fixed assets Inventories Accounts Receivable Other operating short term assets Cash Total 208 234 90 172 23 42 769 208 246 95 180 25 42 796 208 263 102 193 26 37 829 107 202 28 37 858 112 213 29 36 888 117 221 30 41 918 120 228 31 50 234 246 259 286 301 317 272 312 312 Equity Interest bearing debt Operating provisions Accounts Payable Other operating short term liabilities Total 312 26 158 39 769 312 31 166 41 796 312 51 204 50 918 312 46 196 48 888 312 56 210 52 947 178 187 46 850 829 780 452 328 819 475 344 876 508 368 920 534 386 968 580 406 1,005 583 422 1,035 800 435 123 66 155 131 70 167 Profit & Loss Account Revenues Cost of goods sold Gross margin - Personnel cost - Other operating cost EBITDA Depreciation EBITA - Amortization EBIT -Interest PBT Taxes Net profit 155 83 197 138 74 174 36 138 8 133 117 62 149 31 118 0 118 16 102 28 76 156 145 77 184 37 147 0 147 16 131 33 122 0 122 16 106 27 79 151 80 191 39 152 0 152 16 135 34 102 138 133 16 117 122 31 91 156 16 140 35 105 What are the capital expenditures in 2021 in millions? Please round your answer to the nearest whole number and provide your answer in USD without a dollar sign (e.g. 101 instead of $101). Enter answer here 6. Please consider the following company financials: 4 points Amounts in min dollars 31-12-18 actuals 31-12-19 forecast 31-12-20 forecast 31-12-21 31-12-22 forecast forecast 31-12-23 forecast 31-12-24 forecast 2018 310 Balance sheet Goodwil Tangible foed assets Inventories Accounts Receivable Other operating short term assets Cash Total 208 234 90 172 23 208 246 95 180 25 208 263 102 193 26 37 829 208 276 107 202 28 37 858 208 290 112 213 2018 301 117 221 30 41 918 120 228 31 50 42 796 769 888 234 246 272 288 301 317 259 312 36 312 312 Equity Interest bearing debt Operating provisions Accounts Payable Other operating short termiabilities Total 312 312 26 158 39 769 312 31 166 41 796 312 46 196 48 888 178 44 829 187 46 858 51 204 50 918 56 210 52 947 1,005 780 452 328 819 475 344 876 508 368 920 534 386 580 406 1.035 600 435 Profit & Loss Account Revenues - Cost of goods sold Gross margin - Personnel cost - Other operating cost EBITDA Depreciation EBITA - Amortization EBIT Interest PBT Taxes Net profit 117 62 149 31 118 0 118 16 102 155 83 197 128 74 174 36 138 131 70 167 34 133 0 133 16 117 422 151 80 191 39 152 123 66 155 33 122 0 122 16 106 27 79 145 77 184 37 147 0 147 16 131 156 138 16 122 152 16 136 34 102 156 16 140 35 105 76 88 91 98 What is the present value (at December 2018) of the free cash flow of 2024 for this company? Please assume a WACC of 8% and a tax rate of 25%. Please round your answer to the nearest whole number and provide your answer in USD millions without a dollar sign (e.g. 100 instead of $100). Enter answer here 2 points 7. Assume that you have full year forecasted financials for 2019-2024 (planning period) and the following financials for after the planning period: NOPAT (last year of planning period) = 120 Long term growth rate = 2% Long term ROCB = 11% WACC = 8% What is the present value (at December 2018) of the terminal value of this company using the Convergence Model? Please round your answer to the nearest whole number and provide your answer in USD millions without a dollar sign (e.g. 100 instead of $100). Enter answer here 8. Please consider the following company financials: 2 points Amounts in min dollars 31-12-18 actuals 31-12-19 forecast 31-12-20 forecast 31-12-21 forecast 31-12-22 forecast 31-12-23 forecast 31-12-24 forecast 208 246 208 278 208 290 208 301 310 Balance sheet Goodwill Tangible foxed assets Inventories Accounts Receivable Other operating short term assets Cash Total 208 234 90 172 23 42 769 95 180 25 208 263 102 193 26 37 829 112 213 107 202 28 37 858 117 221 30 120 223 31 50 947 796 888 918 234 246 259 272 288 301 317 312 312 312 312 312 312 Equity Interest bearing debt Operating provisions Accounts Payable Other operating short term labilities Total 312 31 41 46 51 56 26 158 166 41 796 36 178 44 829 187 46 858 196 48 888 204 50 918 210 52 947 769 819 475 344 876 508 368 920 534 386 960 580 406 1,005 583 422 1,035 600 435 Profit & Loss Account Revenues - Cost of goods sold Gross margin - Personnel cost - Other operating cost EBITDA Depreciation EBITA Amortization EBIT - Interest PBT Taxes Net profit 780 452 328 117 62 149 31 118 0 118 16 102 26 76 123 66 155 33 122 0 122 16 131 70 167 34 133 0 138 74 174 36 138 0 138 16 145 77 184 37 147 0 147 16 151 80 191 39 152 0 152 16 155 83 197 41 156 0 156 16 140 35 105 27 79 16 117 29 88 31 91 33 98 34 102 A private equity firm considers acquiring the company per 31/12/2018 and uses multiples valuation. It will use 4x the 2018 EBITDA of debt to finance the acquisition at the entry date. The private equity firm targets to exit the company after 5 years at the end of 2023 and expects to realise an exit EBITDA-multiple of 7.5x. Because all intermediate cash flows the firm will generate are used to repay the debt, you may assume that the expected net debt level at the end of 2023 will be 40% of the initial debt level at entry. Calculate the maximum enterprise value and equity investment the PE is willing to invest at the entry date when the private equity-house targets an IRR of 25%. Enterprise value: 982.6 Equity Investment: 402.6 O Enterprise value: 1433 Equity Investment: 1194 O Enterprise value: 984.3 Equity Investment: 592.8 O Enterprise value: 987.3 Equity Investment: 391.3 9. Which of the following is true about the Convergence Model for calculating the terminal value: 1 point It should be used when a company is expected to maintain a long-term competitive advantage. It assumes that the return on new investments are roughly equal to the weighted average cost of capital in the long- run. It is the most suitable formula for companies with high brand value, such as Coca Cola or Heineken. It accounts for long-term value creating growth. 10. Why are the operating taxes in the FCF analysis calculated without taking into account the tax shield on interest? 1 point Taxes are not considered operating costs. Tax benefits of debt financing are already accounted for through the WACC. O Taxes can be reclaimed by companies. O The tax rate is different in each country. 1 point 11. A private equity fund is considering acquiring a target company in a leveraged buyout. Once acquired, the debt will be paid down at a predetermined absolute amount every year. Which valuation method would be most suitable for estimating the target's value? O WACC method. Free Cash Flow to Equity method. O APV method, using the cost of debt as discount rate for the interest tax shields. APV method, using the unlevered cost of capital as discount rate for the interest tax shields. 2 points 12. Consider an investment of a private equity firm with an equity value at exit (2024) of $976m and at entry (2018) of $362m. What is the internal rate of return (in %) of this PE firm? Please round your answer to one decimal place and provide your answer without a percentage sign (e.g. 30.6 instead of 30.6%). Enter answer here 13. Consider the following two companies, both operating in the magazine business and equal in size: 1 point Active Magazine Inc.: A well known US sports magazine brand. Owns many office buildings and owns multiple printing factories in the US. It generates sales predominantly from the number of readers that subscribe. The company has a relatively high level of debt, which it raised to expand in the past. FASHION Inc.: An established US fashion magazine brand. It rents flexible office spaces throughout the country and outsources its printing production. Its revenues are driven by the number of yearly subscriptions. The company is debt- free. You want to estimate the value of FASHION Inc. using a multiple from Active Magazine Inc. Which type of multiple would be most suitable for your analysis? O Enterprise Value-to-EBITDA (EV/EBITDA) multiple Price-to-Earnings (P/E) multiple O Price-to-Sales (P/S) multiple Enterprise Value-to-Subscribers (EV/Subscribers) multiple 14. Please consider the following data: 1 point Name of Company Get Fit Workout Co. Health Fitness Center Fit for Fun The Crossfit Club Average P/E 22.5x 27.1x 18.0x 23.2x 24.1x 23.0x EV/EBIT 15.3x 21.3x 14.4x 16.Ox 17.2x 16.8x EV/EBITDA 14.1x 19.9x 13.9x 15.1x 15.8x 15.8x P&L Items (in USD min) Sports World Co. EBIT 10.2 EBITDA 11.7 Net Earnings 3.5 Debt 100 What is your estimate of the enterprise value of Sports World Co. using the EBIT multiple? Please round your answer to one decimal place, use a period to indicate the decimal place and provide your answer without a dollar sign (e.g. 10.1 instead of $10.1). Enter answer here