Sie sind auf Seite 1von 3

Answers:

1. Calculate ABCs company after-tax WACC, rounded to four decimal places


WACC=kewe+ kdwd +kpwd
Cost of equity=risk free rate+beta ( risk premium )=2.5+ 1.29 ( 7 )=11.53
Cost of preferred shares=Dividends /market pricefloatation costs
10
Cost of preferred shares= =1 0 .5 263
95
Cost of debts=(9.5 570+ 9 575+8.5 10)/(570+575+10)0.7=9.3 (0.7)=6.47
Weight of debt=debt /total capital ; total capital=10+575+570+ 580+20=1 755
Weight of debt=1155 /1755=0.65811
Weight of preferred equity=20/1755=0.011 4
Weight of ordinary equity =58 0/1755=0. 3305
WACC=11.530.3305+ 6.47 0.65811+10.5263 0.01 1 4
WACC=8.1886
2. Calculate the Detergent Division cost of capital, rounded to four decimal places.
Detergent divisionWACC =the general cost of debt preferred stock+
(equity beta of the divisionrisk premium)

Detergent divisionWACC =(2.5+1.207)0.3305+6.47 0.65811+10.5263 0.01 1 4


Detergent divisionWACC =7 . 9804

3. Calculate the NPVt=0 of the Big strategy using the appropriate discount rate.
NPV =Total discounted cash flows ( DCF )initial investment

Cash

Year

Discounted rate

0
1
2
3
4
5
6

flow
= 7.9804%
-20000
-20000
4000
3704.3760
5000
4288.2504
6500
5162.7199
5000
3677.8184
4500
3065.4049
4000
2523.4250

NPVt=0

2421.9946

4. Using the appropriate discount rate, calculate the NPVt=1 of the expansion option.
NPVt=1
Year

Cash

Discounted rate

flow
0
1
2
3
4
5
6

= 7.9804%

0
-5000
1500
1500
1500
1000
1000

NPVt=1

0
-4630.4700
1286.4751
1191.3969
1103.3455
681.2011
630.8562
262.8049

5. Complete Table 3 fully, in accordance with the given assumptions, to show how the total after-tax cash
flows in year 0 to year 6 are derived.

Construction of the
after-tax cash flows for
Small without
expansion ($000)
Plant
Tax
Investment in working
capital
Capital cash flow
Revenue

t=0
-9000
0

t=1
0
0

t=2
0
0

-400

-16

-9400
0

-16
4000

t=3
0
0

t=4
0
0

t=5
0
0

t=6
1000
0

-16.64

-8.6528

-8.7072

450

-16.64
4160

-8.6528
4326.4

-8.7072
4412.928

0
4500

1450
4500

Variable cost

1600

1664

1730.56

Fixed cost
Depreciation
Profit before tax

0
0
0

200
1500
700

210
1500
786

220.5
1500
875.34

Tax (30%)

210

235.8

262.602

Profit after tax

490

550.2

612.738

Depreciation

1500

1500

1500

Operating cash flow

1990

-9400

1974

Total after-tax cash flow

2050.2 2112.738

1765.171
2
231.525
1500
916.2318
274.8695

1800

1800

243.10125
1500
956.89875
287.06962

255.256313
1500
944.743688

4
641.3622

5
669.82912

6
1500
2141.362

5
1500
2169.8291
3
2169.8291
3

2033.5

2104.08

3
2132.655

283.423106
661.320581
1500
2161.32058
3611.32058

Das könnte Ihnen auch gefallen