Capital Budgeting And Valuation Of Stocks

manipulation 1a. Year012345678 Sales48000004800000480000048000004800000480000048000004800000 COGS38400003840000384000038400003840000384000038400003840000 megascopic PROFIT960000960000960000960000960000960000960000960000 Depreciation112500112500112500112500112500112500112500112500 EBIT847500847500847500847500847500847500847500847500 Income revenue at 30%254250254250254250254250254250254250254250254250 Unlevered clear out Income593250593250593250593250593250593250593250593250 FCF Plus: Depreciation112500112500112500112500112500112500112500112500 keen:Capital Exp dyingitures14000000000000-500000 Less: Increases in NWC48000000000000 FCF-18800007057507057507057507057507057507057507057501205750 Straight-line depreciation= (cost-residual observe) x 1/(estimated helpful life) = Depreciation expense bell= $1400000 Estimated useful life=the anticipate run life of an plus to the present owner= 8 forms sleep Value= the estimated marrow to be recovered upon garbage disposal of the asset at the end of its estimated useful life= $500000 ($1400000-$500000) x 1/8 = $112500 Exercise 1b.

NPV= -1880000 + 705750/1,15 + 705750/?1,15?^2 + 705750/?1,15?^3 + 705750/?1,15?^4 + 705750/?1,15?^5 + 705750/?1,15?^6 + 705750/?1,15?^7 + 1205750/?1,15?^8 = $1801260,52 Exercise 2 The command for cypher the present value of a growing sempiternity, which is a spud of cash flows that occurs at regular intervals and lasts forever, is: C/(r-g) where C is the sign cash flow, r is the interest rate and g is the harvest-festival rate. The interest rate is 14% and the growth rate is 3%. In this case the initial cash flow is whole step to the amount in year 5: $240000*1,03=$247200 PV of the growing sempiternity in year 4 = 247200/(0,14-0,03) = $2247272,727. This is the continuation value of the perpetuity in year 4. To suppose the present value of the...If you mendicancy to get a sufficient essay, order it on our website: Ordercustompaper.com

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