4) Below you can find the information of The Gambler Corporation: Net income = $ x00000 Tax rate -40%. Interest expense - $ 100000. Total investor-supplied operating capital employed = $ x million. After-tax cost of capital -10%. What is the company's EVA? Interpret the result. (20 pts) 1) You want to buy a flat which is sold for TL x00000 cash. Instead, the seller offers you a chance to make quarter of the payment now and the rest in five annual installments with an interest rate of 15%. a) Please show the situation after the initial payment, in timeline and equation form. (10 pts) b) What is the amount of each payment? Please calculate in excel. Write the excel formula. (5 pts) c) Fill in the amortization table below. (10 pts) Period Annual Installment Annual Interest Annual Principal Remaining Debt Payment Payment 1 2 3 4 5 2) The real risk-free rate is 3.5%. Inflation is expected to average 3.x% a year for the next 3 years, thereafter inflation is expected to average 4.x% a year. A 12-year corporate bond has a yield of 9.3%. Assume that there is no maturity risk premium. Liquidity premium on the corporate bond is 0.x%. What is the default risk premium? (15 pts) 3) You have this data for the Pascal Company: Debt/Equity=x0% Total Debt-$5 million Cost of Debt - 10% Tax Rate = 40% ROA = x% What is Pascal's ROE? (15 pts) 4) Below you can find the information of The Gambler Corporation: Net income - S X00000 Tax rate=40%. Interest expense - $ 100000 Total investor-supplied operating capital employed = $ x million. After-tax cost of capital = 10%. What is the company's EVA? Interpret the result. (20 pts) 5) Please answer the questions below for Kuyucakl Yusuf (KY) and Krk Mantolu Madonna (KMM) Corporations: (show all your computations) Economy Probability Recession Average Boom 0.30 0.40 0.30 Ennected Returns KY Inc. KMM Inc. -0.4x -0.2x 0.3x 0.2x 0,6x 0.5x a) Compute the expected return of each stock. (8 pts) KY Inc.: KMM Inc.: b) Compute the total risk (6) of each stock. (8 pts) KY Inc.: KMM Inc.: c) Compute the coefficient of variation of each stock. Evaluate the results. (9 pts) KY Inc.: KMM Inc.: Evaluation: 4) Below you can find the information of The Gambler Corporation: Net income = $ x00000 Tax rate -40%. Interest expense - $ 100000. Total investor-supplied operating capital employed = $ x million. After-tax cost of capital -10%. What is the company's EVA? Interpret the result. (20 pts) 1) You want to buy a flat which is sold for TL x00000 cash. Instead, the seller offers you a chance to make quarter of the payment now and the rest in five annual installments with an interest rate of 15%. a) Please show the situation after the initial payment, in timeline and equation form. (10 pts) b) What is the amount of each payment? Please calculate in excel. Write the excel formula. (5 pts) c) Fill in the amortization table below. (10 pts) Period Annual Installment Annual Interest Annual Principal Remaining Debt Payment Payment 1 2 3 4 5 2) The real risk-free rate is 3.5%. Inflation is expected to average 3.x% a year for the next 3 years, thereafter inflation is expected to average 4.x% a year. A 12-year corporate bond has a yield of 9.3%. Assume that there is no maturity risk premium. Liquidity premium on the corporate bond is 0.x%. What is the default risk premium? (15 pts) 3) You have this data for the Pascal Company: Debt/Equity=x0% Total Debt-$5 million Cost of Debt - 10% Tax Rate = 40% ROA = x% What is Pascal's ROE? (15 pts) 4) Below you can find the information of The Gambler Corporation: Net income - S X00000 Tax rate=40%. Interest expense - $ 100000 Total investor-supplied operating capital employed = $ x million. After-tax cost of capital = 10%. What is the company's EVA? Interpret the result. (20 pts) 5) Please answer the questions below for Kuyucakl Yusuf (KY) and Krk Mantolu Madonna (KMM) Corporations: (show all your computations) Economy Probability Recession Average Boom 0.30 0.40 0.30 Ennected Returns KY Inc. KMM Inc. -0.4x -0.2x 0.3x 0.2x 0,6x 0.5x a) Compute the expected return of each stock. (8 pts) KY Inc.: KMM Inc.: b) Compute the total risk (6) of each stock. (8 pts) KY Inc.: KMM Inc.: c) Compute the coefficient of variation of each stock. Evaluate the results. (9 pts) KY Inc.: KMM Inc.: Evaluation
