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Case 2 : Suppose the firm now can conduct risk management strategy to secure the operating income ( after COGS, other expenses and cost of
Case : Suppose the firm now can conduct risk management strategy to secure the operating income
after COGS, other expenses and cost of doing risk management to be at the expected level that is
million that is because Now
Step : please determine the EBT Earning before Tax Note based on the same assumption each year's
income streams are the same, the EBT in each year also are the same. You just need write down for one
year.
Step : please determine the tax payments. You just need write down for one year.
Step : please determine the Net Cash Flow from year to
Step : Please use excel NPV function or PV function to determine the firm's value given interest
rate.
Step : Please compare the tax payments and firm values in case without risk management and case
with risk management and summarize your findings.
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