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    Divyam Garg
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    The document contains financial information for multiple investments including initial costs, revenues, expenses, profits, and cash flows projected over multiple years. It also includes calculations for net present value (NPV), internal rate of return (IRR), yield, price, cost of equity, cost of debt, and weighted average cost of capital (WACC) for different projects. The information suggests the projects generated positive cash flows and profits in early years with NPVs indicating overall profitable investments.

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    The document contains financial information for multiple investments including initial costs, revenues, expenses, profits, and cash flows projected over multiple years. It also includes calculations for net present value (NPV), internal rate of return (IRR), yield, price, cost of equity, cost of debt, and weighted average cost of capital (WACC) for different projects. The information suggests the projects generated positive cash flows and profits in early years with NPVs indicating overall profitable investments.

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    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    Download as xlsx, pdf, or txt
    20 views8 pages

    Practice Problem

    Uploaded by

    Divyam Garg
    The document contains financial information for multiple investments including initial costs, revenues, expenses, profits, and cash flows projected over multiple years. It also includes calculations for net present value (NPV), internal rate of return (IRR), yield, price, cost of equity, cost of debt, and weighted average cost of capital (WACC) for different projects. The information suggests the projects generated positive cash flows and profits in early years with NPVs indicating overall profitable investments.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    of 8

    Initial Investment 32,000,000.

    00
    Depreciation 8,000,000.00

    Labour Cost 15 15.3 15.606 15.91812


    Energy Cost 5 5.15 5.3045 5.463635
    0 1 2 3 4
    Sales 40,000,000.00 80,000,000.00 80,000,000.00 60,000,000.00
    Labour Cost -30,000,000.00 -30,600,000.00 -31,212,000.00 -31,836,240.00
    Energy Cost -1,000,000.00 -1,030,000.00 -1,060,900.00 -1,092,727.00
    Contribution 9,000,000.00 48,370,000.00 47,727,100.00 27,071,033.00
    depreciation 8,000,000.00 8,000,000.00 8,000,000.00 8,000,000.00
    EBIT 1,000,000.00 40,370,000.00 39,727,100.00 19,071,033.00
    Tax @ 34% 340,000.00 13,725,800.00 13,507,214.00 6,484,151.22
    EAT 660,000.00 26,644,200.00 26,219,886.00 12,586,881.78
    Add Depreciation 8,000,000.00 8,000,000.00 8,000,000.00 8,000,000.00
    Cash Flow 8,660,000.00 34,644,200.00 34,219,886.00 20,586,881.78

    NPV 48,017,157.55
    Year 0 1 2 3 4
    Investment -10000
    Sales 7000 7000 7000 7000
    operating cost 2000 2000 2000 2000
    5000 5000 5000 5000
    Depreciation 2500 2500 2500 2500
    EBT 2500 2500 2500 2500
    TAX @34% 850 850 850 850
    EAT 1650 1650 1650 1650
    Depreciation 2500 2500 2500 2500
    Cash Flow 4150 4150 4150 4150

    NPV ₹ 2,605.00

    Increamental 0
    Q1 Principal 1000 Q2 Principal 1000
    Term 20 40 Coupon Rate 8%
    Coupon Rate 8% 0.04 Semi annual
    Semi annual 40
    Yield 0.12
    Yield 8% 10% 6% 6%
    4% 5% 3% Time 20
    Price ₹ 1,000.00 ₹ 828.41 ₹ 1,231.15 40
    Par Discount Premium Price ₹ 699.07

    Q3 Principal 1000 Assume Q4 Dividend 1 2


    Term 20 40 Growth 5%
    Coupon Rate 8% 0.04 Ke 12%
    Semi annual 40
    market price to Yield 10% 0.05 Po 28.571429
    PV ₹ -828.41 P10 46.539846

    Q5 Dividend 1 2.36 Q6 A
    Growth 1.5% Rate 10%
    Ke 7.5% FV 1000
    Time 20
    Po 39.333333 Coupon Paymen 100
    Yield 10%
    Prices ₹ 1,000.00
    Yield 12%
    Prices ₹ 850.61
    Q7 Rate 8% Yield 8%
    FV 1000 Prices ₹ 1,196.36
    Time 20
    Coupon Payment 80
    Prices ₹ 1,200.00
    Yield 6%
    Prices ₹ 950.00
    Yield 9%
    0.04 10% 0.05
    40 50

    12%
    6%
    15
    30 Year Div P0
    ₹ 862.35 0 28.57143
    1 2 30
    2 2.1 31.5
    3 2.205 33.075
    4 2.31525 34.72875
    5 2.431013 36.46519
    6 2.552563 38.28845
    7 2.680191 40.20287
    8 2.814201 42.21301
    9 2.954911 44.32366
    10 3.102656 46.53985
    11 3.257789

    B
    10%
    1000
    10
    100
    10%
    ₹ 1,000.00
    12%
    ₹ 887.00
    8%
    ₹ 1,134.20
    Q8 Earning 20 Q9 Po 20 Q10 Po 22
    ROE 14% D1 1 D1 0.88
    b 0.6 P1 22 P1 23.54
    growth 8.40%
    Dividend Yield 5% Dividend Yield 4%
    Earning 1 21.68 Ke 15% Ke 11%
    Expected capital gain 10%

    Q13 D0 2.25 Q14 D0 6 Q15 Beta 1.3


    Ke 16% P 62 Rf 7%
    G 7.0% G 4% Rp 9.50%
    D1 2.4075 D1 6.24 Ke 19.35%
    P 26.75 Ke 14.06%

    Q17 Debt 1 No of Shares 20 Value


    Beta 1.29 equity 1 Q18 P 25 500
    Rf 7% Total 2 debt MV 0.95
    RM 13.00% Kd 10% 171
    RP 6.00% Ke 20%
    Ke 14.74% KO 9.65% Kd after tax 6.0%
    Ko 16.43%
    Cost of debt 7%
    After Tax 4.55%
    Q11 D 2 Q12 Dividend Yield 1.50%
    Ke 15% Ke 8%
    G 6.5%
    Po 13.3333333333333

    Q16 Beta 1.15 Debt 0.25


    Rf 6% equity 1
    Rp 10.00% Total 1.25
    Ke 17.50%
    Kd 0.039 Ko 0.1478

    Q19 intial Investment 25 kd 9% 5.85% 0.75 0.428571


    Estimated life 5 ke 15% 1 0.571429
    Cash flow 7 ko 12.43%

    NPV -0.03
    Reject

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