This assignment consists of two parts. The first part is an excel workbook with calculations. Complete the Cost of Capital tab o Find the cost of Equity using the Capital Asse Pricing Model (CAPM) o...

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This assignment consists of two parts.
The first part is an excel workbook with calculations.





Complete the Cost of Capital tab







o Find the cost of Equity using the Capital Asse Pricing Model (CAPM)









o Find the Weighted Average Cost of Capital (WACC)








Complete the Payback tab







o Complete the After-tax Cash Flow re-evaluation table







o Complete the DCF Payback timeline







Complete the Budget Projections tab







o Revenue increases 5% annually







o Expense increases 2% annually
Part 2 is 5 questions regarding the calculations in the excel workbook.

Instructions


Answer the five questions below. They focus entirely on the financing, risk/return, Cost of Capital and Budget Forecasting of Largo Global Inc. (LGI) based on the investing activities that took place in project 4. Base your analysis on the data provided and calculated in the Excel workbook. Provide support for your reasoning from the readings in Project 5, Step 1, and the discussion in Project 5, Step 3. Be sure to cite your sources.



Provide a detailed response below each question. Use 12-point font and double spacing. Maintain the existing margins in this document. Your final Word document, including the questions, should not exceed 5 pages. Include a title page in addition to the five pages. Any tables and graphs you choose to include are also excluded from the five-page limit. Name your document as follows: P5_Final_lastname_Report_date.



You must address all five questions and make full use of the information on all tabs of project 5 as well as data in other Excel workbooks (e.g. from project 1: ratio, common-size, and cash flow analysis).



You are strongly encouraged to exceed the requirements by refining your analysis. Consider other tools and techniques that were discussed in the required and recommended reading for Project 5. This means adding an in-depth explanation of what happened in that year for which data was provided to make precise recommendations to LGI.







Answered 8 days AfterNov 21, 2021

Answer To: This assignment consists of two parts. The first part is an excel workbook with calculations....

Nitish Lath answered on Nov 30 2021
133 Votes
Project 5 Excel Workbook
Instructions
    INSTRUCTIONS
        Complete the Cost of Capital tab
        o   Find the cost of Equity using the Capital Asse Pricing Model (CAPM)
        o   Find the
Weighted Average Cost of Capital (WACC)
        Complete the Payback tab
        o   Complete the After-tax Cash Flow re-evaluation table
        o   Complete the DCF Payback timeline
        Complete the Budget Projections tab
        o   Revenue increases 5% annually
        o   Expense increases 2% annually
Cost of Capital
    Instructions:
        1    Find the cost of Equity using the Capital Asset Pricing Model (CAPM)
        2    Find the Weighted Average Cost of Equity (WACC)
    1
        RF    1.28%    ꞵ    1.12    RM    4.72%     = CAPM        6.57%
    --------------------------------------
    2
                                    E            $ 5,681,981,200
                                    D            $ 539,500,000
                                    Total Capital (V)            $ 6,221,481,200
                                    Last Fiscal Year End Interest Expense            $6,905,600
                                    Tax Rate (TC)            21.000%
            1. Find the weight of equity = E / (E + D).                             91.328%
            2. Find the weight of debt = D / (E + D).                             8.672%
        Re    3. Find the cost of equity using CAPM.                            6.57%
        Rd    4. Find the cost of debt.                            1.011%
        WACC    5. Find the weighted average cost of capital.                            6.08%
WACC Information from Largo Global
a. As of today, Largo Global market capitalization (E) is $5,681,981,200.1
b. Largo Global's book value of debt is $539,500,000.2
c. Cost of Equity = CAPM from question 1
d. Cost of Debt = Last Fiscal Year End Interest Expense3 / Book Value of Debt (D).
e. Use the tax rates given in Project 4 Tab 3.
_________
1 Market value of equity (E), also known as market cap, is calculated using the following equation:
    Market Cap = Share Price x Shares Outstanding from Project 1
2 Book value of debt (D) is calculated as follows: Book Value of Debt...
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