Requirment #1

Wd We D/E Ratio Kd Kd(1-t) β Ke

0.749 0.251 2.98406374502 0.023 0.01955 0.83983 0.1

Estimatimating the optimal Capital structure

Wd We D/E Ratio Beta Kd Kd(1-t) Ke

0% 100% 0.0000 0.28151 0.00% 0.00% 0.0027683742
10% 90% 0.1111 0.308097 0.03% 0.000255 0.0027444206
20% 80% 0.2500 0.341331 0.30% 0.00255 0.0027144786
30% 70% 0.4286 0.38406 1.30% 0.01105 0.0026759818
40% 60% 0.6667 0.441032 2.30% 0.01955 0.0026246528
50% 50% 1.0000 0.520794 3.30% 0.02805 0.0025527921
60% 40% 1.5000 0.640435 4.30% 0.03655 0.0024450011
Existing 70% 30% 2.3333 0.839838 5.30% 0.04505 0.0022653495
80% 20% 4.0000 1.238644 6.30% 0.05355 0.0019060462
90% 10% 9.0000 2.435061 7.30% 0.06205 0.0008281362

2022 2022
EBIT 8,348,000 C.A 20,991,000
EBIT(1-t) 7095800 C.L 15,887,000
DEP & AMT 1,404,000 NOWC -714,000
OCF 8,499,800 F.A 31,889,000
∆ NOWC -714,000 ∆ NOWC -714000
∆ F.A 831,000 ∆ F.A 831,000
FCF 8,382,800
WACC
0.03974295
3.97%

Assumed Ke WACC Vo E D 1-g P

7.10% 0.07100 99940845.07 99940845.07 0 63.22% 37.71353
7.60% 0.06843 103701105.6 93330995.024 10370110.5582 39.13249
8.10% 0.06531 108647986.5 86918389.221 21729597.3052 40.99924
8.60% 0.06351 111718491.7 78202944.186 33515547.5085 42.15792
9.10% 0.06242 113678308.2 68206984.941 45471323.2938 42.89747
9.60% 0.06203 114402257.2 57201128.577 57201128.5772 43.17066
10.10% 0.06233 113842451.5 45536980.587 68305470.8808 42.95942
10.60% 0.06334 112035999.1 33610799.716 78425199.3369 42.27774
11.10% 0.06504 109099016 21819803.198 87279212.7921 41.16944
11.60% 0.06745 105208688.6 10520868.856 94687819.7049 39.70139

2021 ∆
19,815,000 1,176,000 Equity 9,266,000 Payout Ratio
13,997,000 1,890,000 ROE 65.59% RR 43.92%
Growth 0.36782872
31,058,000 831,000 R.remaining Growth 36.78%
N.I 5,732,000
Dividend

T.A 52,880,000
NO of shares 2,650,000
 Chart Title
0.07200
0.07000
0.06800
0.06600
0.06400
0.06200
0.06000
0.05800
0.05600
1 2 3 4 5 6 7 8 9 10

Value of the firm FCF(1-g)/(WACC-g)

EBIT(1-t)/WACC
Year EBIT NI
2022 8,348,000 5,732,000
2021 9,123,000 6,315,000

S.D of EBIT 387500

S.D of NI 291500
Average EBIT 8,735,500
Average NI 6,023,500

Business Risk (CV of EBIT) 0.044359223857

Total firm risk (CV of NI) 0.048393790985
Financial Risk 0.004034567129
 Formulas

Wd = Total long term liability/Total long term liability + Total Equity

We = Total equity/Total long term liability + Total Equity

Kd = Interest Expense/Average debt

Ke = Rf + B (Rm-Rf)
B = Bu[1+(1-t)(D/E)]

Tax = Tax expense/EBIT

The D/S ratio is calculated as: D/S = wd/(1- wd) or Debt/Equity

 2022 2021
Total Long term Liability 27,727,000 25,917,000
Total Equity 9,266,000 10,959,000
Total Long term Liability and Total equity 36,995,022 36,878,021
Wd 74.9479 70.2776
We 25.0466 29.7169

Avg Wd 72.6128
Avg We 27.3818
Interest Expense 623,000 569,000
Avg Debt 26,822,000
Kd 0.02322720155 0.021213928864
Avg Kd 0.02222056521
D/E ratio 2.65186761929

EBT 7,303,000 8,119,000

Income Tax Expense 948,000 1,235,000
Effective income tax rate 0.12980966726 0.152112329105
Avg Tax 0.14096099818
Assumed Tax rate 15%

β 0.83983037907
Ke 0.00226560711
Assumed Ke 10%
 NYSE LMT Total Returns
TR (NYSE)
Date Open Close Open Close Rm
12/19/22 15018.17 15188.45 481.78 483.29 0.0113382838
12/26/22 15188.45 15184.31 485 486.49 -0.0002726167
01/02/23 15184.31 15539.74 483.39 473.24 0.0234077593
01/09/23 15539.74 15918.37 467.79 449.83 0.0243652646
01/16/23 15918.37 15777.55 450.3 443.28 -0.0088464027
01/23/23 15777.55 15962.58 443.11 459.6 0.0117274403
01/30/23 15962.58 15999.4 462 459.08 0.0023066643
02/06/23 15999.4 15910.69 463.58 480.83 -0.0055445803
02/13/23 15910.69 15840.16 485.19 475.63 -0.0044328858
02/20/23 15840.16 15464.46 480.51 480.4 -0.0237182068
02/27/23 15464.46 15721.06 480.53 477.89 0.0165928593
03/06/23 15721.06 14894.18 476.82 475.5 -0.0525969562
03/13/23 14894.18 14599.05 471.87 465.87 -0.019815115
03/20/23 14599.05 14758.57 468.22 474.54 0.0109267733
03/27/23 14758.57 15374.91 477.11 472.73 0.041761487
04/03/23 15374.91 15379.13 473 490.17 0.0002744554
04/10/23 15379.13 15601.78 491.77 487.99 0.0144774374
04/17/23 15601.78 15578.93 486.57 482.55 -0.0014646139
04/24/23 15578.93 15545.88 482.39 464.45 -0.0021214426
05/01/23 15545.88 15380.87 465.04 455.54 -0.0106143729
05/08/23 15380.87 15246.36 456.49 450.79 -0.0087452637
05/15/23 15246.36 15324.32 450.79 454.49 0.005113349
05/22/23 15324.32 15078.69 454 448.45 -0.016028762
05/29/23 15078.69 15345.19 448.08 454.49 0.0176739486
06/05/23 15345.19 15499.91 456.14 462.69 0.0100826201
06/12/23 15499.91 15795.12 462.79 459.17 0.0190459143
06/19/23 15795.12 15469.35 459.48 459.36 -0.0206247566
06/26/23 15469.35 15875.91 455.94 460.38 0.0262816833
07/03/23 15875.91 15671.63 460 458.71 -0.012867311
07/10/23 15671.63 16040.23 458.5 464.31 0.0235202457
07/17/23 16040.23 16289.12 466.29 454.76 0.015516588
07/24/23 16289.12 16363.26 456 449 0.0045514827
07/31/23 16363.26 16071.06 449.71 445.72 -0.0178570896
08/07/23 16071.06 16143.38 447.32 454.05 0.0045000339
08/14/23 16143.38 15750.17 454.59 450.06 -0.0243573504
08/21/23 15750.17 15766.91 449.84 451.09 0.0010628605
08/28/23 15766.91 16091.79 450.81 448.18 0.0206051712
09/04/23 16091.79 15878.99 448 423.09 -0.0132241226
09/11/23 15878.99 15973.68 422.22 424.05 0.0059631911
09/18/23 15973.68 15569.51 427.66 413.65 -0.0253022428
09/25/23 15569.51 15398.21 413.23 408.96 -0.0110022607
10/02/23 15398.21 15214.02 408.96 400.73 -0.0119618079
10/09/23 15214.02 15323.7 428.72 441.06 0.0072091839
10/16/23 15323.7 15033.31 439.42 444.17 -0.0189504246
10/23/23 15033.31 14675.78 444.21 443.39 -0.0237824742
10/30/23 14675.78 15475.2 444.42 453.34 0.0544720558
11/06/23 15475.2 15388.44 454.84 444.87 -0.0056063743
11/13/23 15388.44 15813.46 445 444.68 0.0276194026
11/20/23 15813.46 15983.82 444.03 452.01 0.0107731232
11/27/23 15983.82 16263.75 451.86 449.41 0.0175133154
12/04/23 16263.75 16207.76 447.37 448.02 -0.0034426399
12/11/23 16207.76 16609.84 451.88 441.81 0.024807875
12/18/23 null null null null #VALUE!

Average 0.0021213538
Total Returns Equity Risk Premium Market Risk Premium
TR (LMT) Ri-Rf Rm-Rf
Ri Rf
0.0031342314 0.006387 -0.003253 0.004951
0.0030721443 -0.074704 0.077777 0.074432
-0.020997589 0.007143 -0.02814 0.016265
-0.038393342 -0.060613 0.022219 0.084978
-0.015589583 0.006982 -0.022572 -0.015828
0.0372142844 -0.044133 0.081348 0.055861
-0.006320374 0.027882 -0.034203 -0.025576
0.037210407 -0.066515 0.103726 0.060971
-0.019703615 -0.017654 -0.002049 0.013221
-0.000228957 0.065053 -0.065282 -0.088771
-0.0054939 -0.036844 0.03135 0.053437
-0.002768355 0.049137 -0.051906 -0.101734
-0.012715367 0.031306 -0.044022 -0.051121
0.0134979454 0.025167 -0.011669 -0.014241
-0.009180219 0.014048 -0.023228 0.027713
0.0363002389 0.020306 0.015994 -0.020031
-0.007686518 -0.011337 0.00365 0.025814
-0.008261954 -0.004467 -0.003795 0.003003
-0.037189831 0.023832 -0.061022 -0.025954
-0.02042835 0.026693 -0.047121 -0.037307
-0.012486541 0.023268 -0.035754 -0.032013
0.0082077706 0.029419 -0.021212 -0.024306
-0.012224643 0.002349 -0.014573 -0.018377
0.0143054883 -0.058014 0.072319 0.075688
0.0143595975 0.058273 -0.043913 -0.04819
-0.007822114 0.027258 -0.03508 -0.008212
-0.000261221 -0.007164 0.006902 -0.013461
0.00973813 0.007215 0.002523 0.019066
-0.002804367 0.011625 -0.014429 -0.024492
0.0126717514 -0.028114 0.040785 0.051634
-0.024727099 0.033397 -0.058124 -0.01788
-0.015350877 0.061995 -0.077346 -0.057444
-0.008872362 0.00814 -0.017012 -0.025997
0.0150451151 0.00526 0.009785 -0.00076
-0.009965019 -0.043332 0.033367 0.018975
0.0027787658 0.016193 -0.013414 -0.01513
-0.005833954 0.033774 -0.039608 -0.013169
-0.055602688 -0.019015 -0.036588 0.005791
0.0043342025 0.02814 -0.023806 -0.022177
-0.032759692 -0.015743 -0.017016 -0.009559
-0.010333277 -0.074224 0.063891 0.063222
-0.020124169 -0.064394 0.04427 0.052432
0.028783348 0.001771 0.027013 0.005438
0.0108097034 0.034275 -0.023466 -0.053226
 -0.00184592 0.022472 -0.024318 -0.046254
0.0200710651 0.060726 -0.040655 -0.006254
-0.021919798 0.003417 -0.025337 -0.009023
-0.000719117 0.009195 -0.009915 0.018424
0.0179717835 -0.007133 0.025104 0.017906
-0.005421992 -0.016278 0.010856 0.033792
0.0014529227 -0.081701 0.083154 0.078258
-0.022284693 0.034943 -0.057227 -0.010135
#VALUE! 0.07452 #VALUE! #VALUE!

-0.003564588 0.003022
isk Premium

Existing Beta
0.83983
Date Open Close
12/18/2023 3.91% 3.94% 0.006387
12/15/2023 4.23% 3.91% -0.074704
08/12/23 4.20% 4.23% 0.007143
01/12/23 4.47% 4.20% -0.060613
11/24/2023 4.44% 4.47% 0.006982
11/17/2023 4.65% 4.44% -0.044133
10/11/23 4.52% 4.65% 0.027882
03/11/23 4.84% 4.52% -0.066515
10/27/2023 4.93% 4.84% -0.017654
10/20/2023 4.63% 4.93% 0.065053
10/13/2023 4.80% 4.63% -0.036844
06/10/23 4.58% 4.80% 0.049137
09/29/2023 4.44% 4.58% 0.031306
09/22/2023 4.33% 4.44% 0.025167
09/15/2023 4.27% 4.33% 0.014048
08/09/23 4.19% 4.27% 0.020306
01/09/23 4.23% 4.19% -0.011337
08/25/2023 4.25% 4.23% -0.004467
08/18/2023 4.15% 4.25% 0.023832
11/08/23 4.05% 4.15% 0.026693
04/08/23 3.95% 4.05% 0.023268
07/28/2023 3.84% 3.95% 0.029419
07/21/2023 3.83% 3.84% 0.002349
07/14/2023 4.07% 3.83% -0.058014
07/07/23 3.84% 4.07% 0.058273
06/30/2023 3.74% 3.84% 0.027258
06/23/2023 3.77% 3.74% -0.007164
06/16/2023 3.74% 3.77% 0.007215
09/06/23 3.70% 3.74% 0.011625
02/06/23 3.81% 3.70% -0.028114
05/26/2023 3.68% 3.81% 0.033397
05/19/2023 3.47% 3.68% 0.061995
12/05/23 3.44% 3.47% 0.00814
05/05/23 3.42% 3.44% 0.00526
04/28/2023 3.58% 3.42% -0.043332
04/21/2023 3.52% 3.58% 0.016193
04/14/2023 3.41% 3.52% 0.033774
07/04/23 3.47% 3.41% -0.019015
03/31/2023 3.38% 3.47% 0.02814
03/24/2023 3.43% 3.38% -0.015743
03/17/2023 3.71% 3.43% -0.074224
10/03/23 3.96% 3.71% -0.064394
03/03/23 3.95% 3.96% 0.001771
02/24/2023 3.82% 3.95% 0.034275
02/17/2023 3.74% 3.82% 0.022472
10/02/23 3.52% 3.74% 0.060726
03/02/23 3.51% 3.52% 0.003417
01/27/2023 3.48% 3.51% 0.009195
01/20/2023 3.51% 3.48% -0.007133
01/13/2023 3.56% 3.51% -0.016278
06/01/23 3.88% 3.56% -0.081701
12/30/2022 3.75% 3.88% 0.034943
12/23/2022 3.49% 3.75% 0.07452