Scribd Logo
Upload

Welcome to Scribd!

  • 31 views

    All Equity Financing: Particulars ($000) 2001 2002 E 2003 E 2004E 2005E 2006 E

    Uploaded by

    Muskan Valbani
    The document presents financial projections for an equity-financed project from 2001-2006 showing sales, EBITDA, taxes, cash flows, NPV, and cost of equity calculations, as well as an alternative financing structure using constant debt ratio showing similar projections and calculations including WACC. The equity-financed structure yields a positive NPV of $1,228 while the constant debt ratio structure increases NPV to $1,847 due to tax benefits of debt financing.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content

    You might also like

    All Equity Financing: Particulars ($000) 2001 2002 E 2003 E 2004E 2005E 2006 E

    Uploaded by

    Muskan Valbani
    31 views7 pages
    The document presents financial projections for an equity-financed project from 2001-2006 showing sales, EBITDA, taxes, cash flows, NPV, and cost of equity calculations, as well as an alternative financing structure using constant debt ratio showing similar projections and calculations including WACC. The equity-financed structure yields a positive NPV of $1,228 while the constant debt ratio structure increases NPV to $1,847 due to tax benefits of debt financing.

    Original Description:

    Original Title

    Assignment 4

    Copyright

    © © All Rights Reserved

    Available Formats

    XLSX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    The document presents financial projections for an equity-financed project from 2001-2006 showing sales, EBITDA, taxes, cash flows, NPV, and cost of equity calculations, as well as an alternative financing structure using constant debt ratio showing similar projections and calculations including WACC. The equity-financed structure yields a positive NPV of $1,228 while the constant debt ratio structure increases NPV to $1,847 due to tax benefits of debt financing.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    31 views7 pages

    All Equity Financing: Particulars ($000) 2001 2002 E 2003 E 2004E 2005E 2006 E

    Uploaded by

    Muskan Valbani
    The document presents financial projections for an equity-financed project from 2001-2006 showing sales, EBITDA, taxes, cash flows, NPV, and cost of equity calculations, as well as an alternative financing structure using constant debt ratio showing similar projections and calculations including WACC. The equity-financed structure yields a positive NPV of $1,228 while the constant debt ratio structure increases NPV to $1,847 due to tax benefits of debt financing.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    of 7

    All Equity Financing

    Particulars($000) 2001 2002 E 2003 E 2004E 2005E 2006 E


    Fixed Capital Investment -1500 -300 -300 -300 -300 -300
    Working Capital Investment 0 0 0 0 0 0

    Sales 1200 2400 3900 5600 7500


    Ebitda 180 360 585 840 1125
    Depreciation -200 -225 -250 -275 -300
    EBIT -20 135 335 565 825
    Tax Expense 8 -54 -134 -226 -330
    EBIAT -12 81 201 339 495
    Add: Depreciation 200 225 250 275 300
    Cashflow 188 306 451 614 795
    FCFE -112 6 151 314 495
    Terminal Value 4812.5
    Total Cashflows -112 6 151 314 5307.5
    PVCF $ 2,728.49
    NPV $ 1,228.49
    Cost of Equity Calculation
    βa 1.5
    ka 15.8%
    APV method
    Value of firm using all equity financing $ 1,228.49
    PV of ITS $ 450.00
    APV $ 1,678.49
    Using Constant Debt ratio
    Particulars($000) 2001 2002 E 2003 E 2004E 2005E 2006 E

    Fixed Capital Investment -1500 -300 -300 -300 -300 -300


    Working Capital Investment 0 0 0 0 0 0

    Sales 1200 2400 3900 5600 7500


    Ebitda 180 360 585 840 1125
    Depreciation -200 -225 -250 -275 -300
    EBIT -20 135 335 565 825
    Tax Expense 8 -54 -134 -226 -330
    EBIAT -12 81 201 339 495
    Add: Depreciation 200 225 250 275 300
    Cashflow 188 306 451 614 795
    FCFF -112 6 151 314 495
    Terminal Value 5637.202
    Total Cashflows -112 6 151 314 6132.202
    PVCF ₹ 3,346.68
    NPV ₹ 1,846.68
    Cost of Equity Calculation
    βa 1.5
    βd 0.25
    βe 1.75
    Debt 375 Equity 1125
    Kd 6.80%
    tax rate 40%
    Ke 17.600%
    WACC 14.22%
    Notes
    Risk-free Rate (Rf) 0.05
    Project Cost of Debt (Rd) 0.068
    Market Risk Premium 0.072
    Marginal Corporate Tax Rate 0.4
    Project Debt Beta (βd) 0.25
    Debt Schedule

    You might also like