I need to book a finance expert for an exam this Thursday at 6pm CST. The material is similar to the 3 assignments I have submitted in the past. I will submit on Thursday at 6pm and it needs to be returned by 10pm CST. Can you help?
Problem Set E 1. The firm has forecast sales of $7,000 and profit margin of 6 percent. What is the forecast net income? Problems 1 2. The firm had sales of $26* million, operating expenses of $14 million, interest of $4 million and pays a tax rate of 20%, with1 million shares outstanding. What is the firm’s net income? EPS? Problems 2 3. The firm’s NOPAT=$112, depreciation expense is $10, interest expense is $20, tax rate is 0%. What is the firm’s EBITDA? OCF? Problems 3 4. Assume that the firm earned net income of $30 million last year, and it has one million shares of stock outstanding. What is earnings per share? Problems 4 5. The all-equity firm (it has no debt and so no interest expense) has shareholders who require 9% return on their invested capital. The firm’s assets total $1,100. Earnings before tax is $135 and the firm’s tax rate is 0%. What is the firm’s Economic profit? Problems 5 6. A corporate bond matures in five years. This bond’s credit spread over comparable maturity Treasury Bonds is 2.75%. Treasury bond yields are currently 2.125%, 4.375%, and 6.250% for 2-year, 5-year, 10-year maturity bonds, respectively. What is the required rate of return on debt for the firm which issued the bond? Problems 6 6. A corporate bond matures in five years. This bond’s credit spread over comparable maturity Treasury Bonds is 2.75%. Treasury bond yields are currently 2.125%, 4.375%, and 6.250% for 2-year, 5-year, 10-year maturity bonds, respectively. What is the required rate of return on debt for the firm which issued the bond? Problems 7 7. The firm has bonds outstanding that mature in five years. The par value of each bond is $1,000, the coupon rate is 6%, paid annually, and the current price is $988. The firm’s tax rate is 40%. What is the debt holder’s required rate of return? Problems 8 8. The market risk premium is 5.8%. The firm has an estimated beta of 1.6 and the current risk free rate is 3.8%. What is the cost of equity? Problems 9 9. Yesterday’s dividend was $3.00, current share price is $55, the growth rate in the dividend is 4 percent. What is the cost of equity for this constant growth stock? Problems 10 10. The firm is financed with debt and equity. The book value of debt is $12 million. The book value of equity is $11 million. The stockholder’s require a 10.1% return. The required rate of return on the firm’s debt is 5% and the firm’s tax rate is 20%. What is the firm’s weighted average cost of capital (WACC)? Problems 11 11. The firm has two divisions, A and B. Each has its own capital structure. Projects in division B are financed with 40% debt and 60% equity. The required rate of return on debt is 9%. Division B’s beta is 0.82. The tax rate is 40%. The U.S. Treasury risk free rate is 3%, and the market risk premium is 6%. What is division B’s WACC? Problems 12 12. The firm is considering the purchase of a new machine. The machine costs $33,500 and will produce an after-tax cash flow of $7,000 per year at the end of each of the next 7 years, and an additional after tax cashflow at year 7 of $ (-)1000. What is the project IRR? Problems 13 13. The firm purchased a truck five year ago for $20,000. The truck is halfway through its 10-year life, but you must sell the truck. Since the time of purchase, you have taken a total of $ 11,000* of depreciation on the truck. The dealer will only pay $13,000 for the truck today. The tax rate associated with any gain or loss is 25% What is the after-tax cashflow from the sale of the truck? Problems 14 13. The firm purchased a truck five year ago for $20,000. The truck is halfway through its 10-year life, but you must sell the truck. Since the time of purchase, you have taken a total of $ 11,000* of depreciation on the truck. The dealer will only pay $13,000 for the truck today. The tax rate associated with any gain or loss is 25% What is the after-tax cashflow from the sale of the truck? Problems 15 14. The firm invests $1,000 today, and realizes after tax cashflows in the amounts of $100, $600, and $900 at the ends of years 1-3, respectively. WACC=10%. Find NPV. Problems 16 15-19. The firm gets 100% of its capital from common stock. The equity holder’s required rate of return is 10% and the firm’s tax rate is 0%. The project involves an immediate investment of $10,000 for the purchase and installation of equipment. The equipment will be depreciated straight-line, over 4 years, down to a salvage value of $ 0. The project is expected to generate operating cashflows [=ebit(1-t)+dep] in the amount of $5,000 at the end of each of the next four years. Assume that at the end of the fourth year the related equipment is sold for $2,000. 15.) What is WACC? 16.) What are the FCFFs? 17.) What is the NPV? What is the IRR? Risk analysis: 18) & 19) Problems 17 15. The firm gets 100% of its capital from common stock. The equity holder’s required rate of return is 10% and the firm’s tax rate is 0%. The project involves an immediate investment of $10,000 for the purchase and installation of equipment. The equipment will be depreciated straight-line, over 4 years, down to a salvage value of $ 0. The project is expected to generate operating cashflows [=ebit(1-t)+dep] in the amount of $5,000 at the end of each of the next four years. Assume that at the end of the fourth year the related equipment is sold for $2,000. What is the weighted average cost of capital? Problems 18 16. The firm gets 100% of its capital from common stock. The equity holder’s required rate of return is 10% and the firm’s tax rate is 0%. The project involves an immediate investment of $10,000 for the purchase and installation of equipment. The equipment will be depreciated straight-line, over 4 years, down to a salvage value of $ 0. The project is expected to generate operating cashflows [=ebit(1-t)+dep] in the amount of $5,000 at the end of each of the next four years. Assume that at the end of the fourth year the related equipment is sold for $2,000. What are the FCFFs for each year? Problems 19 16. The firm gets 100% of its capital from common stock. The equity holder’s required rate of return is 10% and the firm’s tax rate is 0%. The project involves an immediate investment of $10,000 for the purchase and installation of equipment. The equipment will be depreciated straight-line, over 4 years, down to a salvage value of $ 0. The project is expected to generate operating cashflows [=ebit(1-t)+dep] in the amount of $5,000 at the end of each of the next four years. Assume that at the end of the fourth year the related equipment is sold for $2,000. What are the FCFFs for each year? Problems 20 Project cashflows: FCFF 01234 [1] NOPAT + Depreciation 5,000 5,000 5,000 5,000 [3] Capex ATCF (10,000) 2,000 Total(10,000) 5,000 5,000 5,000 7,000 Problems 21 17. The firm gets 100% of its capital from common stock. The equity holder’s required rate of return is 10% and the firm’s tax rate is 0%. The project involves an immediate investment of $10,000 for the purchase and installation of equipment. The equipment will be depreciated straight-line, over 4 years, down to a salvage value of $ 0. The project is expected to generate operating cashflows [=ebit(1-t)+dep] in the amount of $5,000 at the end of each of the next four years. Assume that at the end of the fourth year the related equipment is sold for $2,000. What is the NPV? Problems 22 17. The firm gets 100% of its capital from common stock. The equity holder’s required rate of return is 10% and the firm’s tax rate is 0%. The project involves an immediate investment of $10,000 for the purchase and installation of equipment. The equipment will be depreciated straight-line, over 4 years, down to a salvage value of $ 0. The project is expected to generate operating cashflows [=ebit(1-t)+dep] in the amount of $5,000 at the end of each of the next four years. Assume that at the end of the fourth year the related equipment is sold for $2,000. What is the IRR? Problems 23 Risk Analysis: 18.) Let’s say the ATCF is off by +/- 10% from base case value. What is the NPV impact ? Problems 24 Risk Analysis 18) Let’s say the ATCF is off by +/- 10% from base case value. What is the NPV impact ? Problems 25 Risk Analysis 19) Lets say the OCF values are off by $200 from base case value. What is the NPV impact ? Problems 26 Risk Analysis 19) Lets say the OCF values are off by $200 from base case value. What is the NPV impact ? Problems 27 20. Choosing projects while subject to a budget constraint The firm has $100 of capital available to invest. The following set of projects have been proposed. In which projects should the firm invest? ProjectCF at t=0 NPV A $ (-) 40$ 6 B $ (-) 50$