i just need the calculations that can be used for the valuation with leverage and methods that produce equivalent results , preferred level of debt

Assignment: Read the following material over a company facing a critical decision. Conduct your own analysis of the firm's options and develop a recommendation. Write a 2-3 page paper (double spaced, not including graphs or other exhibits) reporting your evaluation of the options and your recommendation. You are a financial consultant who has been retained to analyze the presented project and make a detailed recommendation on the financing of the project to the Board. Your analysis should include at least two approaches to valuation with leverage, in your work you should show that the methods produce equivalent results. Your recommendation should include a preferred level of debt, with alternatives presented and shown to be inferior. Your paper should be organized as a detailed professional proposal, with an executive summary and conclusions supported by data and analysis. Data and calculations should be attached in an appendix and work should be submitted in a separate spreadsheet. The firm: The Initech Company is a large manufacturer and distributor of electronic components. Despite being a major player in the industry the firm has failed to provide significant returns to its shareholders in recent history. Due to the economic downturn and because of some successful new products marketed to manufacturers of personal computers by a competitor, Initrode, the firm has recently undergone a period of slow but persistent growth. The new CEO, following recommendations of the Board, has decided to undertake a new investment opportunity. The R&D team originally forecast that an investment of $699.6M would result in a return on the new investment of 23%. They also forecast that this new product will offer constant and ongoing growth at this rate. They noted that the return on the new investment may be as low as 20% and as high as 25%. As often happens, a competitor has already entered the market and reduced the value of the project but the Board has chosen to continue. Further, as also often happens, the team underestimated several notable costs. The firm has $700m in cash retained to invest in this project if necessary. necessary. Given the presence of a competitor the incremental cash flows will end in 3 years. These cashflows are as shown on the following page, where the Market Value balance sheet is also shown. The project is assumed to have the same average risk as the firm's other projects. The Boa would like their Debt to Value ratio to go no lower than it currently is, and might consider a higher level of debt it can be proven to improve firm value while not including significant levels of risk of financial distress and bankruptey. Direct and indirect bankruptcy costs would be substantial. The equity cost of capital is 15% the cost of debt is 4% and the firm's marginal tax rate is 35%. 0 Sales COGS Gross Profit Operating Expenses Depreciation EBIT Tax (35%) Unlevered Net Plus dep Less Capital Expenditures Less Increases in NWC 0.00 403.54 0.00 -403.54 141.24 -262.30 0.00 1 900.00 180.00 720.00 150.00 166.67 403.33 -141.17 262.17 166.67 2 900.00 180.00 720.00 150.00 166.67 403.33 -141.17 262.17 166.67 900.00 180.00 720.00 150.00 166.67 403.33 141.17 262.17 166.67 500.00 100.00 .862.30 0.00 0.00 0.00 0.00 0.00 100.00 428.83428.83528.83 FCF Market Value Balance Sheet Assets Liabilities Cash 700.000 Debt 2700.00 Existing 11900.000 Equity 9900.00 Total Assets 12600.000 Total Liabilities 12600.00 Assignment: Read the following material over a company facing a critical decision. Conduct your own analysis of the firm's options and develop a recommendation. Write a 2-3 page paper (double spaced, not including graphs or other exhibits) reporting your evaluation of the options and your recommendation. You are a financial consultant who has been retained to analyze the presented project and make a detailed recommendation on the financing of the project to the Board. Your analysis should include at least two approaches to valuation with leverage, in your work you should show that the methods produce equivalent results. Your recommendation should include a preferred level of debt, with alternatives presented and shown to be inferior. Your paper should be organized as a detailed professional proposal, with an executive summary and conclusions supported by data and analysis. Data and calculations should be attached in an appendix and work should be submitted in a separate spreadsheet. The firm: The Initech Company is a large manufacturer and distributor of electronic components. Despite being a major player in the industry the firm has failed to provide significant returns to its shareholders in recent history. Due to the economic downturn and because of some successful new products marketed to manufacturers of personal computers by a competitor, Initrode, the firm has recently undergone a period of slow but persistent growth. The new CEO, following recommendations of the Board, has decided to undertake a new investment opportunity. The R&D team originally forecast that an investment of $699.6M would result in a return on the new investment of 23%. They also forecast that this new product will offer constant and ongoing growth at this rate. They noted that the return on the new investment may be as low as 20% and as high as 25%. As often happens, a competitor has already entered the market and reduced the value of the project but the Board has chosen to continue. Further, as also often happens, the team underestimated several notable costs. The firm has $700m in cash retained to invest in this project if necessary. necessary. Given the presence of a competitor the incremental cash flows will end in 3 years. These cashflows are as shown on the following page, where the Market Value balance sheet is also shown. The project is assumed to have the same average risk as the firm's other projects. The Boa would like their Debt to Value ratio to go no lower than it currently is, and might consider a higher level of debt it can be proven to improve firm value while not including significant levels of risk of financial distress and bankruptey. Direct and indirect bankruptcy costs would be substantial. The equity cost of capital is 15% the cost of debt is 4% and the firm's marginal tax rate is 35%. 0 Sales COGS Gross Profit Operating Expenses Depreciation EBIT Tax (35%) Unlevered Net Plus dep Less Capital Expenditures Less Increases in NWC 0.00 403.54 0.00 -403.54 141.24 -262.30 0.00 1 900.00 180.00 720.00 150.00 166.67 403.33 -141.17 262.17 166.67 2 900.00 180.00 720.00 150.00 166.67 403.33 -141.17 262.17 166.67 900.00 180.00 720.00 150.00 166.67 403.33 141.17 262.17 166.67 500.00 100.00 .862.30 0.00 0.00 0.00 0.00 0.00 100.00 428.83428.83528.83 FCF Market Value Balance Sheet Assets Liabilities Cash 700.000 Debt 2700.00 Existing 11900.000 Equity 9900.00 Total Assets 12600.000 Total Liabilities 12600.00