must show work in excel

2 = 9.57 m 8% Ch Data Given: 3 Debt/Equity of project= 40% ; debt amt = 40% of 18.5m 4 T= 28% 5 Levered equity 15% 6 Debt Issue $ retiring at the end of year 3. 7 IR 8 PMT= $3.19 m 9 10 YEAR UCF 11 0 -18.5 m 12 1 5.79 m 13 2 9.59 m 14 3 8.89 m 15 16 Calculate Value of the Project. What would happen if there is a flotation cost? 17 18 Hints: 19 1. APV = NPV (UCF) at Ro + NPV (Financing at Rs) 20 2. RS = RO+ (B/S)(RO-RB)(1 - TC) 21 3. NPV (debt financing) = Proceeds - Aftertax PV(Interest Payments) PV(Principal Payments) 22 4. Each year, an equal principal payment will be made, which will reduce the interest accrued during the year. 23 5. Given a known level (AMT) of debt, debt cash flows should be discounted at the pretax cost of debt, 24 6. Use APV if the project's level of debt is known over the life of the project. 25 Use WACC or FTE if project uses firm's target DN ratio over project's life. 26 27 28 Use ?? because the level of debt for the project is known throughout the life of the projec 29 APV = NPV (UCF) at Ro + NPV (Financing at RB) 30 31 . Find NPV (UCF) discounted at Ro 32 33 RS = R0 + (B/S)(RO-RB)(1 - TC) 34 35 36 37 38 Discounted at ? PV of UCF 40 41 5.79 42 43 44 45 Ro AAAAAAwwwwwwwww WNOOOOOOWN 39 YEAR UCF -18.5 ON 1 2 3 9.59 8.89 NPV= 2 = 9.57 m 8% Ch Data Given: 3 Debt/Equity of project= 40% ; debt amt = 40% of 18.5m 4 T= 28% 5 Levered equity 15% 6 Debt Issue $ retiring at the end of year 3. 7 IR 8 PMT= $3.19 m 9 10 YEAR UCF 11 0 -18.5 m 12 1 5.79 m 13 2 9.59 m 14 3 8.89 m 15 16 Calculate Value of the Project. What would happen if there is a flotation cost? 17 18 Hints: 19 1. APV = NPV (UCF) at Ro + NPV (Financing at Rs) 20 2. RS = RO+ (B/S)(RO-RB)(1 - TC) 21 3. NPV (debt financing) = Proceeds - Aftertax PV(Interest Payments) PV(Principal Payments) 22 4. Each year, an equal principal payment will be made, which will reduce the interest accrued during the year. 23 5. Given a known level (AMT) of debt, debt cash flows should be discounted at the pretax cost of debt, 24 6. Use APV if the project's level of debt is known over the life of the project. 25 Use WACC or FTE if project uses firm's target DN ratio over project's life. 26 27 28 Use ?? because the level of debt for the project is known throughout the life of the projec 29 APV = NPV (UCF) at Ro + NPV (Financing at RB) 30 31 . Find NPV (UCF) discounted at Ro 32 33 RS = R0 + (B/S)(RO-RB)(1 - TC) 34 35 36 37 38 Discounted at ? PV of UCF 40 41 5.79 42 43 44 45 Ro AAAAAAwwwwwwwww WNOOOOOOWN 39 YEAR UCF -18.5 ON 1 2 3 9.59 8.89 NPV=