Please find the instructions in the word file attached.
Document 1 Please show all of your work Please answer the following questions by filling in the blanks with your numerical answers. Do NOT include commas "," in your numerical answer, input your numerical answer without commas. For example, if you answer is 111,111, input 111111. · if your answer is $555,444, input 555444. · input 5.2% as .052. Capital Budgeting 1. Suppose a project costs $10,000 today and pays off $12,000 in a year. If the cost of capital in this investment opportunity is 10%, what is its NPV? Free Cash Flows with Working Capital 2. Suppose a firm’s inventory increases from $5 million to $10 million. Suppose the firm has no other short-term asset and liability. What is the implied change in net working capital (in millions)? (Give your answer as a number without $ or decimal) NPV and its Alternatives 3. Suppose a project costs $10,000 today and pays off $12,000 in a year. If the cost of capital in this investment opportunity is 10%, what is its IRR? (Give your answer as a whole number without a % symbol) Valuation with Multiples: Multiples versus DCF 4. You are trying to value the XYZ company and have been given the following information. 1) The firm has no net debt. 2) The firm has no working capital at time 0. 3) The cost of capital is 9%. 4) XYZ's sales will be $100 million at time 1 and will grow at 3% per year, in perpetuity (e.g., sales will be $103 million at time 2, $106.09 at time 3, etc.) 5) For every time period, t, XYZ's cost of goods sold (COGS) at time t is 50% of revenue at time t, SG&A expenses at t are 10% of revenue at time t, capital expenditures at t are 20% of revenue at t, depreciation at t is 18% of revenue at t. The level of accounts receivable at time t is 5% of revenue at t, the level of inventories at time t is 5% of revenue at t, and the level of accounts payable at time t is 10% of revenue at t. Revenue at time 1 100.00 million Cost of goods sold (% of revenue) 0.50 50.0% SG&A expenses (% of revenue) 0.10 10.0% Capital expenditures (% of revenue) 0.20 20.0% Depreciation (% of revenue) 0.18 18.0% Accounts receivable (% of revenue) 0.05 5.0% Inventories (% of revenue) 0.05 5.0% Accounts payable 0.10 10.0% Tax rate 0.20 20.0% What is the value of XYZ's equity, using discounted cash flow valuation? **Remember to answer this question in millions, without a dollar sign "$" or a comma "," (i.e. for $10 million, answer 10) 5) You also want to value XYZ using Enterprise Value-to-Free Cash Flow multiples. You have collected data on firms in similar businesses to XYZ shown in the table below. You expect these parameters to stay the same forever. Pick one for to use the as comparable. Firm Capital efficiency Cost of Capital Growth rate of sales Net margin: A 0.97 7.20% 6% 40% B 0.65 7.20% 3% 20% C 0.97 9% 6% 40% D 0.65 9% 3% 20% A) Firm A B) Firm B C) Firm C D) Firm D 6) You are valuing a project using the multiples method and a free cash flow multiple. You have found a set of comparable firms that have an average FCF multiple of 20. If the discount rate and the comparables is 8%, what is the growth rate in cash flows implicitly assumed by the multiples?