0 1 2 3 4

EBIT 90,000.00 94,500.00 99,225.00 104,186.25

Taxes 18,000.00 18,900.00 19,845.00 20,837.25
NOPAT 72,000.00 75,600.00 79,380.00 83,349.00
Depreciation Expense 80,000.00 80,000.00 80,000.00 80,000.00
CAPEX (320,000.00)
Change in NWC 13,500.00 675.00 708.75 744.19 (15,627.94)
Project FCF (333,500.00) 151,325.00 154,891.25 158,635.81 178,976.94

NPV thủ công 173,506.57

NPV
IRR 32%

Change in NWC = NWC of current

year - NWC of previous year

NWC year 0 = EBIT year 1 x 15%

NWC year 1 = EBIT year 2 x 15%
Change in NWC year 1 = (EBIT2 -
EBIT1) x 15%
Year 4 change in EBIT formula (0-EBIT4) x 15%
Tax 20% unlevered beta 1.3
Cost of debt 7.50% debt beta 0.25
a) Capital structure weight
for debt and equity
Debt 0.344262295082
Equity 0.655737704918
b) Levered equity beta 1.85125
c) KT's cost of equity (CAPM) 12.793437500%
d) WACC 0.104547131148
The KT’s financial analyst estimates that the current yield on similar debt
will fall to 7.5% if the company raises its debt fund today.
a. What are KT Inc’s capital structure weights for debt and equity?
b. Based on KT Inc’s corporate income tax rate of 20%, the firm’s current
capital structure, and an unlevered beta estimate of 1.30, and a debt beta
of .25 for the corporate debt of firms such as KT Inc, what is KT’s levered
equity beta?
c. Assuming a long-term U.S. Treasury bond yield of 4.0% and an
estimated market risk premium of 4.75%, what is KT’s cost of equity using
the CAPM?
d. What is your estimate of KT’s WACC?
a) Unlevered equity beta
EMN 1.4329
CE 1.5729
DOW 1.3779
b)
Average of 3 companies, used
for unlevered beta of Sterling 1.4612
Levered equity beta of Sterling 1.7515

c)
Levered equity beta of Sterling 2.8805
debt weight 20%
cost of debt 8%
equity weight 80%
debt beta 0.3
equity beta 1.4

debt weight question b 30%

tax rate 35%

a) Cost of equity CAPM 0.1175

WACC 10.44%
For question b, we have to calculate
unlevered equity beta, then relevered it
b) for the project
Project D/E 42.857142857142900%
Unlevered equity beta
(using firm's D/E, not
project's D/E 1.18
Relevered equity beta
(project's equity beta 1.55714285714286
Cost of equity project 0.12575
Project's WACC 10.362500%