1-Swamp & Sand Industries has the following data. At a discount rate of 12%, calculate its Adjusted Present Value (APV) for 20X1 through 20X3. Interest expense is $5 million per year. The interest rate on debt is 6%. The corporate tax rate is 40%.

	20X1	20X2	20X3
FCF	109	109	109
Depreciation	2	2	2

All numbers are in millions.

Flag this Question2-At the end of 10 years, Grokster Investments plans to sell its interest in One City Tower, an office building in Miami, FL. In year 10 the building is expected to generate an annual cash flow of $38 million that is expected to grow at an annual rate 2% forever. The discount rate for projects such as this is 14%. Calculate the terminal value at the end of the 10th year.

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3-For Palm and Sun Industries, calculate depreciation given the following data: Beg Net PPE $1488, End Net PPE $3437 Cap Ex $1918.

There were no sales nor liquidations of assets.

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3-Swamp & Sand Industries has the following data. Calculate its Capital Expenditures (CapEx) adjustment for cash flow in 20X2.

	20X1	20X2
Net PPE	1500	7598
Depreciation Expense	300	2753

4-You are an analyst valuing Palm and Sun Industries for a possible acquisition. Compute the Adjusted Present Value.

The buyer wants cash flows evaluated for 20 years and assumes a terminal value a $50 M to be discounted at 15%. Ignore taxes.

Annual cash flow from continuing operations $ 91 M. Discount at 15%.

Annual cash flow from product line expansion $ 12 M. Discount at 18%.

Annual cash flow from tax savings $ 3 M. The interest rate on debt is 6% and the tax rate is 40%. You do not need to calculate a terminal value for tax savings.