Part I: Calculate your company's Weighted Average Cost of Capital in Practice Year 2. In calculating cost of equity, use the CAPM. In the CAPM, use 6.0% for the risk free rate, 5.0% for the market risk premium, and assume your company is rated average in terms of financial risk, in the prime of its life cycle. Select an appropriate beta (hint: what beta reflects average risk). Part II: Calculate your company's Economic Value-Added (EVA) for Practice Year 2. Part III: Calculate your company's Market Value-Added (MVA) for Practice Year 2. Part IV: Suppose that the beta value you used in the previous parts is really an unlevered beta. Calculate the beta value that is consistent with your actual leverage. The debt beta should be assumed to be zero. NOTE: Use the spreadsheet attached for work and show all calculations and steps. Numbers are in thousands.

Financial Historical Summaries for Digby Cash Flow Statement (in thousands) Financials Net Income Depreciation Gain Loss Write offs Accounts Payable Inventory Accounts Receivable Cash Flow From Operations Plant Improvements Dividends Stock Issue Stock Retire Long Term Debt Issue Long Term Debt Retire Change In Current Debt Cash From Financing Change In Cash Closing Cash Balance Sheet (in thousands) Rd 2 Cash Accounts Receivable Inventory Total Current Assets Plant & Equipment Accumulated Depreciation Total Fixed assets Total Assets Accounts Payable Current Debt Long Debt Total Liabilities Common Stock Retained Earnings Total Equity Total Liab And Equity Income Statement (in thousands) 3,155 1,000 672 -127 0 79 4,779 2,362 -2,280 0 -1,464 0 -1,733 0 -5,477 1,664 12,209 12,209 3,762 0 15,970 15,000 -5,000 10,000 25,970 2,642 0 6,001 8,643 6,235 11,092 17,327 25,970 Rd 2 Sales Direct Labor Direct Material Inventory Carry Total Variable Cost Contribution Margin Depreciation R and D Promo Sales Budget Admin Total Period Costs Net Margin Other EBIT Interest Short Term Debt Interest Long Term Debt Taxes Profit Sharing Net Profit 45,766 14,086 18,055 0 32,142 13,624 1,000 1,470 2,000 2,000 785 7,255 6,369 720 5,649 0 697 1,734 64 3,155 Digby Financial Stats ROS Asset Turnover ROA Leverage ROE Emergency Loans Sales Variable Costs SGA EBIT Profit Cumulative Profit Stock Price Market Capitalization S&P Rating Working Capital Days of Working Capital Free Cash Flow Plant and Equipment Total Assets Plant Utilization Low End Tech Segment Share High End Tech Segment Share Overall Market Share Complement Overtime Turnover Rate Productivity Index 6.89% 1.76 12.15% 1.5 18.21% $0 $45,765,809 $32,141,537 $6,254,778 $5,649,471 $3,155,025 $6,844,533 $14.00 $31,914,642 A $13,328,530 106.3 $7,141,364 $15,000,000 $25,970,300 195.01% 16.37% 8.64% 13.76% 235 0.39% 10.04% 100.00%