Swamp & Sand Industries has the following data. At a discount rate of 12%, calculate its Adjusted Present Value (APV) for 20X1 through 20X3. Interest expense is $5 million per year. The interest rate on debt is 6%. The corporate tax rate is 40%.

	20X1	20X2	20X3
FCF	109	109	109
Depreciation	2	2	2

All numbers are in millions.

Flag this QuestionQuestion 21pts At the end of 10 years, Grokster Investments plans to sell its interest in One City Tower, an office building in Miami, FL. In year 10 the building is expected to generate an annual cash flow of $38 million that is expected to grow at an annual rate 2% forever. The discount rate for projects such as this is 14%. Calculate the terminal value at the end of the 10th year.

Flag this QuestionQuestion 31pts

For Palm and Sun Industries, calculate depreciation given the following data: Beg Net PPE $1488, End Net PPE $3437 Cap Ex $1918.

There were no sales nor liquidations of assets.

Flag this QuestionQuestion 41pts

Swamp & Sand Industries has the following data. Calculate its Capital Expenditures (CapEx) adjustment for cash flow in 20X2.

	20X1	20X2
Net PPE	1500	7598
Depreciation Expense	300	2753

Flag this QuestionQuestion 51pts

You are an analyst valuing Palm and Sun Industries for a possible acquisition. Compute the Adjusted Present Value.

The buyer wants cash flows evaluated for 20 years and assumes a terminal value a $50 M to be discounted at 15%. Ignore taxes.

Annual cash flow from continuing operations $ 91 M. Discount at 15%.

Annual cash flow from product line expansion $ 12 M. Discount at 18%.

Annual cash flow from tax savings $ 3 M. The interest rate on debt is 6% and the tax rate is 40%. You do not need to calculate a terminal value for tax savings.

Flag this QuestionQuestion 61pts

Given the following data from Swamp & Sand Industries, calculate the EBIT. The tax rate is 30%.

Sales	11683
Cost of Sales	5091
SGA	1458
Depreciation	1083
Interest Expense	130
NWC	560
CapEx	1041
Dividends	199

Note SGA does not include depreciation.

Flag this QuestionQuestion 71pts Calculate the terminal value of the tax shield given the following information. Assume we are calculating it for the next year (that is, assume there is no planning period, just a terminal value). The tax rate is 30%. Debt will be $170 million. Assume debt grows at the same annual rate as the firm which is 2%. The cost of debt is 7% while the cost of equity is 12%.

Flag this QuestionQuestion 81pts

Swamp & Sand Industries has the following data for the coming year. Free cash flow, cash, and debt are constant. Terminal value is 3 times FCF. The discount rate is 14%. Calculate its Enterprise Value.

Free Cash Flow	173
Cash	47
Debt	109

Flag this QuestionQuestion 91pts

Given the following data from Swamp & Sand Industries, calculate the FCF (Free Cash Flow). The tax rate is 30%.

Sales	1070
Cost of Sales	400
SGA	316
Depreciation	95
Interest Expense	7
Change NWC	16
CapEx	94
Dividends	29

Note SGA does not include depreciation.

Flag this QuestionQuestion 101pts

Given the following data from Swamp & Sand Industries, calculate the NI. The tax rate is 30%.

Sales	1150
Cost of Sales	400
SGA	315
Depreciation	98
Interest Expense	7
NWC	26
CapEx	144
Dividends	30

Note SGA does not include depreciation.

Flag this QuestionQuestion 111pts

Swamp & Sand Industries has the following data. Calculate its Net Working Capital (NWC) adjustment for cash flow in year X2.

	X1	X2
Cash	100	134
Receivables	230	221
Inventories	450	422
Payables	300	317
Debt	140	286

Remember a negative NWC is a source of cash and reduces the need for financing.

Flag this QuestionQuestion 121pts

Swamp & Sand Industries has the following data for the coming year. Free cash flow, cash, and debt are constant. Terminal value is 3 times FCF. The discount rate is 12%. Calculate its Equity Value.

Free Cash Flow	138
Cash	42
Debt	235

Flag this QuestionQuestion 131pts

Swamp & Sand Industries has the following data. At a discount rate of 8%, calculate its Discounted Cash Flow (DCF) for the years presented.

	20X1	20X2	20X3
Free Cash Flow	1021	1021	1021