Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

For the following problems, use Exhibit B. Exhibit B has the balance sheet and Income Statement projections for a specific company. The company is evaluating

For the following problems, use Exhibit B. Exhibit B has the balance sheet and Income Statement projections for a specific company. The company is evaluating if it is worth it to have the capital investment as showed in the Capital Investment Table. The EBITDA multiplier of similar companies 7.2%. The debt used has a coupon of 12.5%. The WACC is 20%

Use the graphs and statements to find out the whole statement. FInd the persent value on free cash flows, present value on continuation for the firm. Tax shielf and expansion of the project. All the information provided.

1) What is the present value of the Free cash flows? NOTE: Provide your answers in dollars. E.G. for 100M you must enter 100000000.0000, for 20M you must enter 20000000.000, etc.

2) What is the present value of the continuation value for the firm? NOTE: Provide your answers in dollars. E.G. for 100M you must enter 100000000.0000, for 20M you must enter 20000000.000, etc.

3) What is the present value of the Interest Tax Shield? NOTE: Provide your answers in dollars. E.G. for 100M you must enter 100000000.0000, for 20M you must enter 20000000.000, etc.

4) What is the Firm Value with the expansion of the project? NOTE: Provide your answers in dollars. E.G. for 100M you must enter 100000000.0000, for 20M you must enter 20000000.000, etc.image text in transcribedimage text in transcribed

\begin{tabular}{|r|l|l|l|l|} \hline \multicolumn{2}{|l|}{ Net Working Capital Requirements } & & & \\ \hline 1 & Current Assets & & & \\ \cline { 2 - 5 } 2 & Current Liabilities & & & \\ \cline { 2 - 5 } 3 & Net Working Capital & & & \\ \cline { 2 - 5 } 4 & Increase in Net Working Capital & & & \\ \hline \end{tabular} \begin{tabular}{|lc|} \hline Integrated Financial Statement Template \\ \hline Exhibit B: Free Cash Flow and Valuation \\ \hline 2021 & 2022 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|l|l|} \hline \multicolumn{2}{|l|}{ Free Cash Flow (000s) } & & & \\ \hline 1 & Net Income & & & \\ \hline 2 & Plus: After-Tax Interes Expense & & & \\ \cline { 2 - 5 } 3 & Unlevered Net Income & & & \\ \cline { 2 - 5 } & Plus: Depreciation & & & \\ \cline { 2 - 5 } 5 & Less: Increases in NWC & & & \\ \hline & Less: Capital Expenditures & & & \\ \hline & Free Cash Flow of Firm & & & \\ \hline \end{tabular} \begin{tabular}{|r|l|l|l|l|} \hline \multicolumn{2}{|l|}{ Net Working Capital Requirements } & & & \\ \hline 1 & Current Assets & & & \\ \cline { 2 - 5 } 2 & Current Liabilities & & & \\ \cline { 2 - 5 } 3 & Net Working Capital & & & \\ \cline { 2 - 5 } 4 & Increase in Net Working Capital & & & \\ \hline \end{tabular} \begin{tabular}{|lc|} \hline Integrated Financial Statement Template \\ \hline Exhibit B: Free Cash Flow and Valuation \\ \hline 2021 & 2022 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|l|l|} \hline \multicolumn{2}{|l|}{ Free Cash Flow (000s) } & & & \\ \hline 1 & Net Income & & & \\ \hline 2 & Plus: After-Tax Interes Expense & & & \\ \cline { 2 - 5 } 3 & Unlevered Net Income & & & \\ \cline { 2 - 5 } & Plus: Depreciation & & & \\ \cline { 2 - 5 } 5 & Less: Increases in NWC & & & \\ \hline & Less: Capital Expenditures & & & \\ \hline & Free Cash Flow of Firm & & & \\ \hline \end{tabular}

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Contemporary Issues In Development Finance

Authors: Joshua Yindenaba Abor, Robert Lensink, Charles Komla Delali Adjasi

1st Edition

1138324329, 978-1138324329

More Books

Students also viewed these Finance questions

Question

6. I understand why I believe and behave the way I do.

Answered: 1 week ago

Question

Environmental education explain?

Answered: 1 week ago

Question

Scope of environmental science short brief ?

Answered: 1 week ago

Question

Ecology and economy ?

Answered: 1 week ago