Answer To: I've attached the assignment file. everything needs to be done on the excel worksheet with...
Nitish Lath answered on Sep 29 2021
#1-#6
#1 Calculate the NPV of the project below #2 What cash flow must you receive in Year 6 to make the project below "NPV positive"? (Hint: use goal seek or solver)
Rate 8% Rate 8%
Year Cash Flow Year Cash Flow
0 -2000 0 -2000
1 500 1 500
2 1000 2 1000
3 150 3 150
4 150 4 150
5 150 5 150
6 150 $ (234.96) 6 553 $ 0.19
#3 Use XIRR to calculate the IRR of the following investment #4 Use XNPV to calculate the NPV of the following investment
Rate 8%
Date Cash Flow Date Cash Flow
1/3/15 -2000 1/3/15 -2000
1/4/16 500 1/4/16 500
6/1/16 1000 6/1/16 1000
1/8/17 150 1/8/17 150
6/6/17 150 6/6/17 150
1/1/18 150 1/1/18 150
1/5/19 150 2.88% 1/5/19 150 $ (157.85)
#5 You make annual $15,000 contributions to your 401(k) at the beginning of each year for 20 years.
Assuming you begin with a zero balance, what is the value of your account at the end of 20 years if the account earns an 8% return each year?
$ (741,343.82)
#6 Model question #5 using the future value table below, but now assume you will be able to increase your contribution to $20,000 in years 10 through 20. What is the account balance at the end of year 20?
Year Account Balance
at Beginning of year Contribution at
Beginning of year Dollar Return on Account Account Balance at end of the Year
1 0.00 15,000.00 1,200.00 16,200.00
2 16,200.00 15,000.00 2,496.00 33,696.00
3 33,696.00 15,000.00 3,895.68 52,591.68
4 52,591.68 15,000.00 5,407.33 72,999.01
5 72,999.01 15,000.00 7,039.92 95,038.94
6 95,038.94 15,000.00 8,803.11 118,842.05
7 118,842.05 15,000.00 10,707.36 144,549.41
8 144,549.41 15,000.00 12,763.95 172,313.37
9 172,313.37 15,000.00 14,985.07 202,298.44
10 202,298.44 15,000.00 17,383.87 234,682.31
11 234,682.31 15,000.00 19,974.58 269,656.90
12 269,656.90 15,000.00 22,772.55 307,429.45
13 307,429.45 15,000.00 25,794.36 348,223.80
14 348,223.80 15,000.00 29,057.90 392,281.71
15 392,281.71 15,000.00 32,582.54 439,864.25
16 439,864.25 15,000.00 36,389.14 491,253.39
17 491,253.39 15,000.00 40,500.27 546,753.66
18 546,753.66 15,000.00 44,940.29 606,693.95
19 606,693.95 15,000.00 49,735.52 671,429.46
20 671,429.46 15,000.00 54,914.36 741,343.82
#7-#11
Use the following assumptions and complete the template below to answer questions #7 through #11.
Assume that short-term FCF growth continues for 7 years and use mid-year discounting of cash flows.
#7 What is the estimated FCF in year 7? 5141.47
#8 What is the terminal value for the firm? 70266.80
#9 What is the price per share of the equity? 51.26
#10 What short term growth rate assumption would give you a share price of estimate of $70? (hint: use goal seek or solver, you may want to create a copy of the model below or in a new tab for this question) 13.82%
#11 Use a data table to answer this question. If the firm's WACC increases to 13% from 10%, what is the difference in your share price estimate? 35.10
CASH FLOW VALUATION TEMPLATE
Current free cash flow (FCF) 3,000 <---Given
Growth rate of FCF, years 1-7 8.00% <---Given
Long-term FCF growth rate 2.50% <---Given
Weighted average cost of capital (WACC) 10.00% <---Given
Year 0 1 2 3 4 5 6 7
FCF 3000.00 3240.00 3499.20 3779.14 4081.47 4407.98 4760.62 5141.47
Terminal value 70266.80
Total (sum of FCF+terminal) 3000.00 3240.00 3499.20 3779.14 4081.47 4407.98 4760.62 75408.27
Enterprise value 53259.09
Add back initial cash 500.00 <---Given
Subtract out debt 2500.00 <---Given
Equity value 51259.09
Price per share (1,000 shares outstanding) 51.26
#12-#16
Use the following information and the financial statements in the tabs at the end of this workbook to answer questions #12 through #16
Tax rate 21%
MV Equity 50.858 billion
Expected return on Mkt 11.90%
30-year Treasury yield 1.42%
10-year Treasury yield 0.68%
OAS on A rated corporate debt 1.03%
OAS on BBB rated corporate debt 1.76%
#12 Calculate the firm's cost of debt using a credit rating adjustment, if its credit rating is BBB+ #14 Calculate the the...