Intro

It is the end of $2024.$ You're a francial analyst working for Apple. The company is

considering producing a nes wearable television set and is predicting the followins

saies $($in $ milloni$).$ Assume all cash flows occur at the end of the year:

COGS and SGBA are mepected to add up to $60\%$ of sales and depreciation is

expectod to be $10\%$ of saies. After $2029,$ sales are expected to grow by $1\mathrm{.}5\%$

torever

To start production at the begining of $2025,$ Apple has to rucst $$109$ millon now

to buld a new tactory. After $2$C$25,$ the factory needs to be expanded to maintain the

same fxod asset turnover $($sales$/$het fixed assets$)$ as in $2025.$

Net working capial consists mainly of inventory of electronics components, minus

some current labities. Net working capital is expected to be always $30\%$ of sales.

Apple has a beta of $0\mathrm{.}75.$ Is tanget capital structure weight for equity is $95\%$ and

the expocted resurn on the Sap $500$ is $5\mathrm{.}2\%.$ The average yield on its bonds is $6\%,$

while the yeld on Treasury bonds is $2\%.$ The project is considered to be as risky as

the firm overall.

Apple's marginal tax rate is $26\%.$

Part $1$

Open a spreadshect with a blaris thb and rame it $\text{'}CF\text{'}$ for calh flows. Puplcate the

table above and extend it to find the operating cash fow for epch year. What is the

operating cash flow for $2029$ in $ millon$]?$

Try again

Part $2$

Extend the spresdsheet to find not caplay spending for each yoy. What is NCS tor

$2009|$n $ million$|?$

$|$ cormet s

Part $3$

Extend the spresdshect to find the change in net working capital for each yea:

What is the change in net working capital for $2029|$ln $ milionl?

$|$ cormect

Part $4$

Exend the spresdsheet to find the cash flow from assets tor each year. What is the

CFA tor $2029($in $ milloni$)?$

Try sogin

Part $5$

Croste a new tab in Excel for coat of cap tal caloulations. Name it 'WACC'. What is

Part $6$

What is Apple's cost of debt $[$belore taxy?

Part $7$

What is the weighted average cost of capital macc$]?$

Try spain

Part $8$

What is the present value of all cash floes ater $2009$ expersed in $2029$ dollars the

terminal value, TV$)[$n $ millor$]?$ Add the terminal value to your spreadsheet.

Part $9$

What is the NPV of the project $($in $ millon$)?$