1. Question and Excel sheet is listed.

Apache Airlines, a privately held firm, is looking to buy additional gates 5*2 3 1090. Apache as $240.000 in the May not be spent is it is used to pay salaries, suppliers, and equipment. Apache asked its bank for a loan but the bank refused saying that Apache's interest-bearing debt to equity was too ligh at 3.1. The bank said that Apache needed to lower that atio below 2.5 in order to get the loan. Separately. SkyBlue Airlines has approached Apache to see if Apache will buy it. Apache's CFO hired you to help with financial analyses. To help, the CFO tells you the following: Apache's cost of capital is -7.7%. This is based on two airlines trading in the capital markets- Caledonian and Laker. Since Apache does not trade, it has no beta, so the FO used Caledonian and Laker as proxies Aside from the purchase price, the gates will require a working capital infusion at purchase of $200,000. Apache estimates the gates will generate cash flows of $280,000/year for the next 8 years. After that, the gates will revert back to the airport operator. You must calculate the NPV and IRR of the gates you were given SkyBlue's 2018 income statement (IS) nd balance sheet (BS), along with forecasts of the revenue growth and tax rates. You must forecast the IS and BS for the next 3 years The price discussed by the two CEOs is 44x SkyBlue's 2018 net earnings. You must calculate this price and compare it with the free cash flow value of SkyBlue, which you must also calculate. The CFO wants to know if Apache is overpaying or underpaying for SkyBlue Apache's forecast balance sheet has been included in the Excel file, so you need do nothing to it. However, the CFO has asked you to consolidate the two balance sheets - the Apache one given to you and the SkyBlue one that you calculated. Once these two are consolidated, you are asked to calculate three debt ratios, as listed in the file Finally, the CFO wants to know if the consolidated balance sheet's Debt/Equity ratio is below 2.5. if so, it will allow Apache to buy the gates. Is Apache's ratio low enough that they can borrow to buy the gates? Start Year1 Year Years YearA Year! Years Year? Years Total Cash Flow SPY rang pir the warren She Bles Aryabition Pike Pull Free Carla Phra . Exiting Delt - I'vewul Values of Sky Base Note and it. Ree Curcal Asset 16,358 19293 2,275 27,295 LTD Debt . Egely Dear