Question I

The purpose of the first question is to familiarize yourself with your company.

I. Stock Performance Analysis and Share Characteristics

II$.$ Industry and Competitors

Please write a short paragraph.

Question II

I. Report in a table the following numbers

$1)$ The stock price for the reference date $($February $1$st$)$

$2)$ The beta $\backslash$beta

$3)$ The number of outstanding shares

$4)$ Total Debt $($D$)$

$5)$ Levered Free Cash Flow $($FCF$)$

$6)$ Tax rate

$7)$ Times interest earned ratio or interest coverage ratio ICR

II$.$ Apply the CAPM formula and find the cost of equity

where Rf $=4\mathrm{.}1\%$

and RM $=14\mathrm{.}47\%$

III. Calculate the cost of debt based on the synthetic rating based on the following table

For firms, mkt cap $>$ $$5$ billion

If interest coverage ratio is

$>$

$<=$ to

Rating is

Spread is

$8\mathrm{.}50$

$100000$

Aaa$/$AAA

$0\mathrm{.}69\%$

$6\mathrm{.}5$

$8\mathrm{.}499999$

Aa$2/$AA

$0\mathrm{.}85\%$

$5\mathrm{.}5$

$6\mathrm{.}499999$

A$1/$A$+$

$1\mathrm{.}07\%$

$4\mathrm{.}25$

$5\mathrm{.}499999$

A$2/$A

$1\mathrm{.}18\%$

$3$

$4\mathrm{.}249999$

A$3/$A$-$

$1\mathrm{.}33\%$

$2\mathrm{.}5$

$2\mathrm{.}999999$

Baa$2/$BBB

$1\mathrm{.}71\%$

$2\mathrm{.}25$

$2\mathrm{.}49999$

Ba$1/$BB$+$

$2\mathrm{.}31\%$

$2$

$2\mathrm{.}2499999$

Ba$2/$BB

$2\mathrm{.}77\%$

$1\mathrm{.}75$

$1\mathrm{.}999999$

B$1/$B$+$

$4\mathrm{.}05\%$

$1\mathrm{.}5$

$1\mathrm{.}749999$

B$2/$B

$4\mathrm{.}86\%$

$1\mathrm{.}25$

$1\mathrm{.}499999$

B$3/$B$-$

$5\mathrm{.}94\%$

$0\mathrm{.}8$

$1\mathrm{.}249999$

Caa$/$CCC

$9\mathrm{.}46\%$

$0\mathrm{.}65$

$0\mathrm{.}799999$

Ca$2/$CC

$9\mathrm{.}97\%$

$0\mathrm{.}2$

$0\mathrm{.}649999$

C$2/$C

$13\mathrm{.}09\%$

$-100000$

$0\mathrm{.}199999$

D$2/$D

$17\mathrm{.}44\%$

For smaller and riskier firms

$<$ $$5$ billion

If interest coverage ratio is

greater than

$<=$ to

Rating is

Spread is

$12\mathrm{.}5$

$100000$

Aaa$/$AAA

$0\mathrm{.}69\%$

$9\mathrm{.}5$

$12\mathrm{.}499999$

Aa$2/$AA

$0\mathrm{.}85\%$

$7\mathrm{.}5$

$9\mathrm{.}499999$

A$1/$A$+$

$1\mathrm{.}07\%$

$6$

$7\mathrm{.}499999$

A$2/$A

$1\mathrm{.}18\%$

$4\mathrm{.}5$

$5\mathrm{.}999999$

A$3/$A$-$

$1\mathrm{.}33\%$

$4$

$4\mathrm{.}499999$

Baa$2/$BBB

$1\mathrm{.}71\%$

$3\mathrm{.}5$

$3\mathrm{.}9999999$

Ba$1/$BB$+$

$2\mathrm{.}31\%$

$3$

$3\mathrm{.}499999$

Ba$2/$BB

$2\mathrm{.}77\%$

$2\mathrm{.}5$

$2\mathrm{.}999999$

B$1/$B$+$

$4\mathrm{.}05\%$

$2$

$2\mathrm{.}499999$

B$2/$B

$4\mathrm{.}86\%$

$1\mathrm{.}5$

$1\mathrm{.}999999$

B$3/$B$-$

$5\mathrm{.}94\%$

$1\mathrm{.}25$

$1\mathrm{.}499999$

Caa$/$CCC

$9\mathrm{.}46\%$

$0\mathrm{.}8$

$1\mathrm{.}249999$

Ca$2/$CC

$9\mathrm{.}97\%$

$0\mathrm{.}5$

$0\mathrm{.}799999$

C$2/$C

$13\mathrm{.}09\%$

$-100000$

$0\mathrm{.}499999$

D$2/$D

$17\mathrm{.}44\%$