Need help with the attached spreadsheet. Could you fill in blanks and use proper formulas to solve?

PART 5 Assume the free cash flows from the Banana Republic project are given below. Assume the weight of the debt, wd, is 54%, the cost of debt, rd = 6%, the tax rate = 35%, ru = 8% and 500 shares of stock are outstanding. 20) The debt capacity, Dt, in year 3 is closest to: 21) The present value of the interest tax shield is closest to (HINT: remember to use ru as the discount rate): 22) The interest tax shield, ITS, stated as a percentage is closest to: 23) The unlevered value of the project, Vu is closest to: 24) The levered value of the project, VL is closest to: 25) The unlevered price per share is closest to (HINT: Eu = Vu * we): 26) The levered price per share is closest to (HINT: EL = VL*we): 27) The free cash flow to equity in year 3 is closest to: BONUS...see box below. GIVEN: wd = rd = Tc = Ru = re = rwacc = Shares outstanding = Year FCF Disc. Rate, rwacc PV 20) Dt $ 0 (50,000) $ 1 19,075 $ 2 25,051 $ 3 26,705 $ 4 28,491 Interest Tax Shield 21) PV of Tax Shield 22) ITS% = 23) Vu= 24) VL = 25) Price, Unlevered 26) Price, Levered Year FCF After Tax Interest Debt Flows 27) Flows to Equity 0 1 2 3 4 NPV PV BONUS: (.25 pts) Summarize your recommendations for 1) purchasing the machine and 2) financing the project. Support your recommendations with the results of your analysis by relating the NPV to the project and also to the financing options (what portion of the NPV is related to each?). ANS: ANS: ANS: Q28 Which of the following is/are an advantage of incorporation? A) Acccess to capital markets B) Limited liability C) Unlimited life D) All of the above Q29 An agency problem can be alleviated by: A) requiring all firms to be sole proprietorships. B) compensating managers in such a way that acting in the best interest of shareholders is also in the best interest of managers. C) asking managers to take on more risk than they are comfortable taking. D) A and B. Q30 Taggart Transcontinental shares are currently trading at $200 per share. The split ratio needed to bring the stock price down to $80 is: A) 2:1 B) 3:1 C) 2:5 D) 5:2 PART 5 Assume the free cash flows from the Banana Republic project are given below. Assume the weight of the debt, wd, is 54%, the cost of debt, rd = 6%, the tax rate = 35%, ru = 8% and 500 shares of stock are outstanding. 20) The debt capacity, Dt, in year 3 is closest to: 21) The present value of the interest tax shield is closest to (HINT: remember to use ru as the discount rate): 22) The interest tax shield, ITS, stated as a percentage is closest to: 23) The unlevered value of the project, Vu is closest to: 24) The levered value of the project, VL is closest to: 25) The unlevered price per share is closest to (HINT: Eu = Vu * we): 26) The levered price per share is closest to (HINT: EL = VL*we): 27) The free cash flow to equity in year 3 is closest to: BONUS...see box below. GIVEN: wd = rd = Tc = Ru = re = rwacc = Shares outstanding = Year FCF Disc. Rate, rwacc PV 20) Dt 54% 6% 35% 8.0% 8.46% 6.00% 500 $ Interest Tax Shield 21) PV of Tax Shield 0 1 2 3 (50,000) $ 19,075 $ 25,051 $ 26,705 $ 1.000 0.943 0.890 0.840 (50,000) 17,996 22,297 22,425 46,056.36 36,338.52 24,298.07 12,188.66 2,763 967.18 2,185 22) ITS% = 81,281 24) VL = 83,466 25) Price, Unlevered 162.56 26) Price, Levered 166.93 NPV PV 1,458 510.26 1 19,075 $ 1,796 19,056 36,335 $ 2 25,051 $ 1,417 (9,718) 13,916 $ 731 255.96 1.13% 23) Vu= Year FCF After Tax Interest Debt Flows 27) Flows to Equity 2,180 763.11 4 28,491 0.792 22,572 $ 0 (50,000) $ $ (27,000) (23,000) $ 3 26,705 $ 948 (12,040) 13,717 $ 4 28,491 475 (12,109) 15,907 $ 47,786.14 $ 70,786 BONUS: (.25 pts) Summarize your recommendations for 1) purchasing the machine and 2) financing the project. Support your recommendations with the results of your analysis by relating the NPV to the project and also to the financing options (what portion of the NPV is related to each?). Answer: It is recommended to make investment in the machinery as it will generate a higher cash inflow that will improve the overall value of the business. Financial option is increasing the overall value of the company, therefore including debt will boost the overall value of the business. ANS: ANS: ANS: Q28 Which of the following is/are an advantage of incorporation? A) Acccess to capital markets B) Limited liability C) Unlimited life D) All of the above Q29 An agency problem can be alleviated by: A) requiring all firms to be sole proprietorships. B) compensating managers in such a way that acting in the best interest of shareholders is also in the best interest of managers. C) asking managers to take on more risk than they are comfortable taking. D) A and B. Q30 Taggart Transcontinental shares are currently trading at $200 per share. The split ratio needed to bring the stock price down to $80 is: A) 2:1 B) 3:1 C) 2:5 D) 5:2 PART 5 Assume the free cash flows from the Banana Republic project are given below. Assume the weight of the debt, wd, is 54%, the cost of debt, rd = 6%, the tax rate = 35%, ru = 8% and 500 shares of stock are outstanding. 20) The debt capacity, Dt, in year 3 is closest to: 21) The present value of the interest tax shield is closest to (HINT: remember to use ru as the discount rate): 22) The interest tax shield, ITS, stated as a percentage is closest to: 23) The unlevered value of the project, Vu is closest to: 24) The levered value of the project, VL is closest to: 25) The unlevered price per share is closest to (HINT: Eu = Vu * we): 26) The levered price per share is closest to (HINT: EL = VL*we): 27) The free cash flow to equity in year 3 is closest to: BONUS...see box below. GIVEN: wd = rd = Tc = Ru = re = rwacc = Shares outstanding = Year FCF Disc. Rate, rwacc PV 20) Dt 54% 6% 35% 8.0% 8.46% 6.00% 500 $ Interest Tax Shield 21) PV of Tax Shield 0 1 2 3 (50,000) $ 19,075 $ 25,051 $ 26,705 $ 1.000 0.943 0.890 0.840 (50,000) 17,996 22,297 22,425 46,056.36 36,338.52 24,298.07 12,188.66 2,763 967.18 2,185 22) ITS% = 81,281 24) VL = 83,466 25) Price, Unlevered 162.56 26) Price, Levered 166.93 NPV PV 1,458 510.26 1 19,075 $ 1,796 19,056 36,335 $ 2 25,051 $ 1,417 (9,718) 13,916 $ 731 255.96 1.13% 23) Vu= Year FCF After Tax Interest Debt Flows 27) Flows to Equity 2,180 763.11 4 28,491 0.792 22,572 $ 0 (50,000) $ $ (27,000) (23,000) $ 3 26,705 $ 948 (12,040) 13,717 $ 4 28,491 475 (12,109) 15,907 $ 47,786.14 $ 70,786 BONUS: (.25 pts) Summarize your recommendations for 1) purchasing the machine and 2) financing the project. Support your recommendations with the results of your analysis by relating the NPV to the project and also to the financing options (what portion of the NPV is related to each?). Answer: It is recommended to make investment in the machinery as it will generate a higher cash inflow that will improve the overall value of the business. Financial option is increasing the overall value of the company, therefore including debt will boost the overall value of the business. ANS: ANS: ANS: Q28 Which of the following is/are an advantage of incorporation? A) Acccess to capital markets B) Limited liability C) Unlimited life D) All of the above Q29 An agency problem can be alleviated by: A) requiring all firms to be sole proprietorships. B) compensating managers in such a way that acting in the best interest of shareholders is also in the best interest of managers. C) asking managers to take on more risk than they are comfortable taking. D) A and B. Q30 Taggart Transcontinental shares are currently trading at $200 per share. The split ratio needed to bring the stock price down to $80 is: A) 2:1 B) 3:1 C) 2:5 D) 5:2 PART 5 Assume the free cash flows from the Banana Republic project are given below. Assume the weight of the debt, wd, is 54%, the cost of debt, rd = 6%, the tax rate = 35%, ru = 8% and 500 shares of stock are outstanding. 20) The debt capacity, Dt, in year 3 is closest to: 21) The present value of the interest tax shield is closest to (HINT: remember to use ru as the discount rate): 22) The interest tax shield, ITS, stated as a percentage is closest to: 23) The unlevered value of the project, Vu is closest to: 24) The levered value of the project, VL is closest to: 25) The unlevered price per share is closest to (HINT: Eu = Vu * we): 26) The levered price per share is closest to (HINT: EL = VL*we): 27) The free cash flow to equity in year 3 is closest to: BONUS...see box below. GIVEN: wd = rd = Tc = Ru = re = rwacc = Shares outstanding = Year FCF Disc. Rate, rwacc PV 20) Dt 54% 6% 35% 8.0% 8.46% 6.00% 500 $ Interest Tax Shield 21) PV of Tax Shield 0 1 2 3 (50,000) $ 19,075 $ 25,051 $ 26,705 $ 1.000 0.943 0.890 0.840 (50,000) 17,996 22,297 22,425 46,056.36 36,338.52 24,298.07 12,188.66 2,763 967.18 2,185 22) ITS% = 81,281 24) VL = 83,466 25) Price, Unlevered 74.78 26) Price, Levered 76.79 NPV PV 1,458 510.26 1 19,075 $ 1,796 19,056 36,335 $ 2 25,051 $ 1,417 (9,718) 13,916 $ 731 255.96 1.13% 23) Vu= Year FCF After Tax Interest Debt Flows 27) Flows to Equity 2,180 763.11 4 28,491 0.792 22,572 $ 0 (50,000) $ $ (27,000) (23,000) $ 3 26,705 $ 948 (12,040) 13,717 $ 4 28,491 475 (12,109) 15,907 $ 47,786.14 $ 70,786 BONUS: (.25 pts) Summarize your recommendations for 1) purchasing the machine and 2) financing the project. Support your recommendations with the results of your analysis by relating the NPV to the project and also to the financing options (what portion of the NPV is related to each?). Answer: It is recommended to make investment in the machinery as it will generate a higher cash inflow that will improve the overall value of the business. Financial option is increasing the overall value of the company, therefore including debt will boost the overall value of the business. ANS: ANS: ANS: Q28 Which of the following is/are an advantage of incorporation? A) Acccess to capital markets B) Limited liability C) Unlimited life D) All of the above Q29 An agency problem can be alleviated by: A) requiring all firms to be sole proprietorships. B) compensating managers in such a way that acting in the best interest of shareholders is also in the best interest of managers. C) asking managers to take on more risk than they are comfortable taking. D) A and B. Q30 Taggart Transcontinental shares are currently trading at $200 per share. The split ratio needed to bring the stock price down to $80 is: A) 2:1 B) 3:1 C) 2:5 D) 5:2 PART 5 Assume the free cash flows from the Banana Republic project are given below. Assume the weight of the debt, wd, is 54%, the cost of debt, rd = 6%, the tax rate = 35%, ru = 8% and 500 shares of stock are outstanding. 20) The debt capacity, Dt, in year 3 is closest to: 21) The present value of the interest tax shield is closest to (HINT: remember to use ru as the discount rate): 22) The interest tax shield, ITS, stated as a percentage is closest to: 23) The unlevered value of the project, Vu is closest to: 24) The levered value of the project, VL is closest to: 25) The unlevered price per share is closest to (HINT: Eu = Vu * we): 26) The levered price per share is closest to (HINT: EL = VL*we): 27) The free cash flow to equity in year 3 is closest to: BONUS...see box below. GIVEN: wd = rd = Tc = Ru = re = rwacc = Shares outstanding = Year FCF Disc. Rate, rwacc PV 20) Dt 54% 6% 35% 8.0% 8.46% 6.00% 500 $ Interest Tax Shield 21) PV of Tax Shield 0 1 2 3 (50,000) $ 19,075 $ 25,051 $ 26,705 $ 1.000 0.943 0.890 0.840 (50,000) 17,996 22,297 22,425 46,056.36 36,338.52 24,298.07 12,188.66 2,763 967.18 2,185 22) ITS% = 81,281 24) VL = 83,466 25) Price, Unlevered 162.56 26) Price, Levered 166.93 NPV PV 1,458 510.26 1 19,075 $ 1,796 19,056 36,335 $ 2 25,051 $ 1,417 (9,718) 13,916 $ 731 255.96 1.13% 23) Vu= Year FCF After Tax Interest Debt Flows 27) Flows to Equity 2,180 763.11 4 28,491 0.792 22,572 $ 0 (50,000) $ $ (27,000) (23,000) $ 3 26,705 $ 948 (12,040) 13,717 $ 4 28,491 475 (12,109) 15,907 $ 47,786.14 $ 70,786 BONUS: (.25 pts) Summarize your recommendations for 1) purchasing the machine and 2) financing the project. Support your recommendations with the results of your analysis by relating the NPV to the project and also to the financing options (what portion of the NPV is related to each?). Answer: It is recommended to make investment in the machinery as it will generate a higher cash inflow that will improve the overall value of the business. Financial option is increasing the overall value of the company, therefore including debt will boost the overall value of the business. ANS: ANS: ANS: Q28 Which of the following is/are an advantage of incorporation? A) Acccess to capital markets B) Limited liability C) Unlimited life D) All of the above Q29 An agency problem can be alleviated by: A) requiring all firms to be sole proprietorships. B) compensating managers in such a way that acting in the best interest of shareholders is also in the best interest of managers. C) asking managers to take on more risk than they are comfortable taking. D) A and B. Q30 Taggart Transcontinental shares are currently trading at $200 per share. The split ratio needed to bring the stock price down to $80 is: A) 2:1 B) 3:1 C) 2:5 D) 5:2 PART 5 Assume the free cash flows from the Banana Republic project are given below. Assume the weight of the debt, wd, is 54%, the cost of debt, rd = 6%, the tax rate = 35%, ru = 8% and 500 shares of stock are outstanding. 20) The debt capacity, Dt, in year 3 is closest to: 21) The present value of the interest tax shield is closest to (HINT: remember to use ru as the discount rate): 22) The interest tax shield, ITS, stated as a percentage is closest to: 23) The unlevered value of the project, Vu is closest to: 24) The levered value of the project, VL is closest to: 25) The unlevered price per share is closest to (HINT: Eu = Vu * we): 26) The levered price per share is closest to (HINT: EL = VL*we): 27) The free cash flow to equity in year 3 is closest to: BONUS...see box below. GIVEN: wd = rd = Tc = Ru = re = rwacc = Shares outstanding = Year FCF Disc. Rate, rwacc PV 20) Dt 54% 6% 35% 8.0% 8.46% 6.00% 500 $ Interest Tax Shield 21) PV of Tax Shield 0 1 2 3 (50,000) $ 19,075 $ 25,051 $ 26,705 $ 1.000 0.943 0.890 0.840 (50,000) 17,996 22,297 22,425 46,056.36 36,338.52 24,298.07 12,188.66 2,763 967.18 2,185 22) ITS% = 81,281 24) VL = 83,466 25) Price, Unlevered 74.78 26) Price, Levered 76.79 NPV PV 1,458 510.26 1 19,075 $ 1,796 19,056 36,335 $ 2 25,051 $ 1,417 (9,718) 13,916 $ 731 255.96 1.13% 23) Vu= Year FCF After Tax Interest Debt Flows 27) Flows to Equity 2,180 763.11 4 28,491 0.792 22,572 $ 0 (50,000) $ $ (27,000) (23,000) $ 3 26,705 $ 948 (12,040) 13,717 $ 4 28,491 475 (12,109) 15,907 $ 47,786.14 $ 70,786 BONUS: (.25 pts) Summarize your recommendations for 1) purchasing the machine and 2) financing the project. Support your recommendations with the results of your analysis by relating the NPV to the project and also to the financing options (what portion of the NPV is related to each?). Answer: It is recommended to make investment in the machinery as it will generate a higher cash inflow that will improve the overall value of the business. Financial option is increasing the overall value of the company, therefore including debt will boost the overall value of the business. ANS: ANS: ANS: Q28 Which of the following is/are an advantage of incorporation? A) Acccess to capital markets B) Limited liability C) Unlimited life D) All of the above Q29 An agency problem can be alleviated by: A) requiring all firms to be sole proprietorships. B) compensating managers in such a way that acting in the best interest of shareholders is also in the best interest of managers. C) asking managers to take on more risk than they are comfortable taking. D) A and B. Q30 Taggart Transcontinental shares are currently trading at $200 per share. The split ratio needed to bring the stock price down to $80 is: A) 2:1 B) 3:1 C) 2:5 D) 5:2