FV $ 1,000

Kd 6.50%
k 2.75%
Tax rate 35.00%
Cost of Debt 4.23%
Coupon Payment $ 65.00
Years To Maturity 7

Vbond $ 1,235.85 at premium

Alternate Method:
1/k 1/2.75% 36.36
1/(k*(1+k)^n 1/(2.75*(1+2.75%)^7 30.07
FV/(1+K)^n $1000/(1+2.75%)^7 $ 827.04
Vbond $ 1,235.85
PS 0
D/V 40%
E/V 60%
Kd 10%
Effective Kd 6%
Tax Rate 40%
WACC 11.25%
Ke 7.25%
Debt ($ m) 1100
LIBOUR 3%
Kd (LIBOUR + 2.75%) 5.75%
Effective Kd 3.45%
# of Prefereed Stock (mil) 20
Market Price of PS / share ($) 10
PS ($ m) 200
Dividend ($)/share 0.8
Kps 8.0%

# of Common Stock (mil) 300

Market price per share ($) 2
Common stock ($ m) 600
Dividend ($)/share 0.1
g 12%
Ke 17.0%

Tax 40%

V ($ m) 1,900

WACC 8%
B 0.5
B 1.4
B 2.3

Krf 4%
Km 10%

Ke (B=0.5) 7.0%
Ke (B=1.4) 12.4%
Ke (B=2.3) 17.8%
E/V 55%
PS/V 15%
D/V 30%

Ke 10%
Kps 5%
Kd 7%
Tax rate 35%
WACC 7.62%
Alternative method
Kd(1-t)(D/V) 1.37%
Kps(PS/V) 0.75%
Ke(E/V) 5.50%
WACC 7.62%
 Kd 8%
ASSUMPTIONS Kps 5%
Ke 10%

Airlines D/V PS/V E/V WACC

EZjET 35% 10% 55% 8.80%
DirectJet 65% 15% 20% 4.75%

Preferred Common
Airlines Debt Stock Equity
EZjET 35% 10% 55%
DirectJet 65% 15% 20%

Kd 8%
ASSUMPTIONS Kps 5%
Ke 10%
 2019 2018 2019
(Rupees in '000' Fixed Cost 15545401
Revenue 147,500,129 103,490,460 Ex. Loss 11693549
Cost of Services 139,677,942 123,222,918 27238950
Gross Profit 7,822,187 - 19,732,458
Fixed Costs 27,238,950 27,300,790
EBIT - 19,416,763 - 47,033,248
Interest 35,537,349 20,384,567
Loss before Tax - 54,954,112 - 67,417,815

YEAR 2019 2018

% Change in Gross Profit -139.6%
% Change in EBIT -58.7%
DOL 2.38
DFL 0.35 0.70

EPS Rs 10 share -10.59 -12.86

% Growth in EPS -17.7%
DFL 0.30

http://www3.piac.com.pk/Downloads/PIA_ANNUAL_REPORT_2019.PDF

10.5%
18.4%

15.5
 2018
12348141
14952649
27300790

27.20 62.70 42.5%

55 37.3%

10.5%
# of outstanding bonds 10,000
PAR Value $ 1,000
D $ 10,000,000
Kd 7%
# Preferred Stock (ps) 200,000
Market Price $ 65
PS $ 13,000,000
Kps 3.50%
# common stock 4,000,000
Market Price $ 48
E $ 192,000,000
V $ 215,000,000
B 0.90
Dividend $ 2.10
Growth Rate 6%
Ke 10.4% 10.6%
Km 15%
Krf 3%
Ke 13.8%
Tax 40%
WACC 12.7%
 Investment ($m) 100
D ($m) 60% 60
E ($m) 40% 40
V ($m) 100
Kd 12%
Ke 16%
Tax 35%
WAAC 11.08%
$ mil DCF ($m)
0 -100.00 -100.00
1 20.00 18.01
2 20.00 16.21
3 20.00 14.59
4 20.00 13.14
5 20.00 11.83
6 20.00 10.65
7 20.00 9.58
8 20.00 8.63
NPV 2.63