1. From the Income Statement and Balance Sheet of SMC, compute the ROI for 2018.

2. Using the IS and BS of San Miguel Corporation for 2018 with these additional assumptions, compute for the EVA for 2018:

1. Market value of debt is P 1,405.147.67
2. Market value of Equity is P 2,107,720
3. Interest rate on Debt is 8.5%
4. Cost of Equity capital is 11.5%
5. Round-off the tax rate to two decimal places
6. Round-off your answer to two decimal places

3. SMC is considering an investment that is projected to produce operating profits of P 225,000 before depreciation for the next four years. At the beginning of the first year (2021), SMC will invest P 598,400 in an asset that has a 12-year life and with salvage value of no salvage value of P 20,000. Straight-line depreciation is used. SMC calculates ROI based on end-of-year asset values.

Required:

1. Calculate the ROI using both the Gross and Net Book value by presenting a table
2. Assuming that at the end of the 9th year, an investor wants to buy the asset at a price of P 160,000. As Property Manager of SMC, are you going to sell it? Why or why not?
3. What is the Book value of the property on Dec. 31, 2026?

SAN MIGUEL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE PERIODS ENDED MARCH 31, 2018 AND 2017 (in Millions, Except Per Share Data) 2018 Unaudited 2017 Unaudited SALES (Note 3) P 234,347 P 195,762 COST OF SALES 183,675 151,352 GROSS PROFIT 50,672 44,410 (17,985) (16,897) SELLING AND ADMINISTRATIVE EXPENSES INTEREST EXPENSE AND OTHER FINANCING CHARGES (8,952) (8,200) INTEREST INCOME 1,373 995 46 144 8 (28) EQUITY IN NET EARNINGS OF ASSOCIATES AND JOINT VENTURES GAIN (LOSS) ON SALE OF INVESTMENTS AND PROPERTY AND EQUIPMENT OTHER CHARGES - Net (Note 4) INCOME BEFORE INCOME TAX INCOME TAX EXPENSE (4,217) (1,104) 20,945 19,320 5,336 5,492 NET INCOME 15,609 P 13,828