Muyiwa Ogun Ajala Jun 25 2016 1005 Ogun Ajala Fin630 Midterm

7/25/2019 Muyiwa Ogun Ajala Jun 25 2016 1005 Ogun Ajala Fin630 Midterm

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Grading Sheet

Problem Your Points Maximum

17 25 68.0%

6 15 0.0%

!.5 10 !5.0%

"otal #2.5 50 65.0%

Problem 1

Problem 2

Problem #

"his exam is o$en boo and is to be &our individual'or ()*Y. Yobeginning of semester). +, &ou ha-e uestions about the exam/ $leasemight ha-e the same uestion. + also reser-e the right to delete $osts or

You must sho' all &our 'or ,or ,ull redit sho'ing &our 'or 'ill alnumber is not enough you have to give your recommendation or eah $roblem is loated in a se$arate s$readsheet tab/ 'hih inludes tha-e to use them. +, &ou deide to use them/ then it is your responsibilnumbers in the text box and numbers in the tem$late/ $lease use the nu

Please $ut &our name on &our exam and in the title of your filesas 'enamed :4+)6#0.; -en i, &ou deide not to use the tem$lates/ $lease :Problem 1/; :Problem 2; et. to identi,& the uestions


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*olution egend

=alue gi-en in $roblem

4ormulaalulation


3/17

ee 'ho

ust a

don3t

,ilessheets


4/17

R-.+M "

*olution

a' /ownload Financial /ata

0n Thousands unless otherwise specified /ec &" 12"$ /ec &" 12"3 /ec &

,ssets 4urrent

>ash and ash eui-alents B17/08# B225/#00 B

Cestrited ash B12/017 B11/!50

Settlements reei-able B156/188 B115/81

Merhant ash ad-ane reei-able/ net B#/6#8 B2!/#02

(ther urrent assets B#2/561 B27/8#

"otal urrent assets B18/87 B0!/867 BPro$ert& and eui$ment/ net B85/012 B6#/7##

Good'ill B56/8!! B0/267

?uired intangible assets/ net B20/726 B10/27!

Cestrited ash B1/57! B1/#!

(ther assets B2# B#/#8

"otal assets B5!5/!6 B51/888 B

>urrent liabilitiesD

?ounts $a&able B7/528 B5/#6

>ustomers $a&able B2#8/085 B18/68

?rued transation losses B16/00 B8/52

?rued ex$enses B#5/66! B17/#68

(ther urrent liabilities B1#/!5 B11/202

"otal urrent liabilities B#11/20 B1!1/106 B

ebt B0 B#0/000 (ther liabilities B50/2 B7/110

"otal liabilities B#61/8 B268/216 B

>ommitments and ontingenies )ote 169

Stoholders3 euit&D

>on-ertible $re,erred sto B51/!5 B51/!5 B

>ommon sto B0 B0

?dditional $aidAin a$ital B2!/!5 B155/166

?umulated other om$rehensi-e loss B1/2779 B8079

?umulated de,iit B52!/1609 B#!5/6#29 B

"otal stoholdersE euit& B2#/62 B27#/672 B

"otal liabilities and stoholdersE euit& B5!5/!6 B51/888 B

0ncome *tatement Year ended /ecember &"

+n "housands/ exe$t Per Share data 12"$ 12"3 12Ce-enues

"ransation re-enue B751/!2! B707/7!! B

"his exerise ass &ou to ,oreast Suare S@9 ,ree ash ,lo' and disuss riss the om$an& is tem$late belo' or &ou ma& reate &our o'n tem$late.

a9 do'nload 201#A2015 historial ,inanial data ,or the om$an&/ using one o, the soures listetem$late belo' or reate &our o'n9. + reommend using 2H $ros$etus9 ,iling 'ith the S

b9 Hased on historial ,inanial data alulate ratios that to be used later in $roA,orma ,inanial ha$ter 6 ,or details99 Lsing historial data ,rom a9 and ratios ,rom b9 reate $roA,orma statements see ha$ter 6 ,od9 stimate ,ree ash ,lo's 4>4 ,or 2016A201! see ha$ters 2 and 6 ,or details9

e9 Ihat are riss the om$an& is ,aing isuss/ ho' its tornado diagram 'ould loo lie seediagram itsel,/ unless &ou 'ant to earn bonus $oints 5 $oints maximum9

Author:

These numb ers are for#eptember 30$ 2015


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?iven

+n-estment ost toda&9 B 600/000/0009

ProNet *i,e 5 &ears

)et Ioring >a$ital 20.00% o, re-enues

Year 1 re-enues B 500/000/000

($erating osts 70.00% o, re-enues?,terAmaret sal-age9 -alue 20% o, initial in-estment

Ce-enue annual gro'th 20.00%

Ceuired rate o, return 12.00%

"ax rate #5%

a'

>ash ,lo' estimation 2 "

+n-estment B 600/000/0009

Ce-enues 500/000/000

($erating osts #50/000/000

H+"? B 150/000/000

*essD e$reiation B !6/000/0009

+nremental H+" B 5/000/000

*essD "axes 18/!00/000

MacroHardonsiders selling a =irtual Cealit& de-ie set HoloGlobe. "he12@'($erating osts are 92@o, re-enues.

"he $roNet reuires ;822Mil in-estment in eui$ment/ 'hih 'ill ha-e a ,iM?>CS o,,iial de$reiation rates are gi-en belo' A it does reuire 6 &ears/original ost. "he om$an& reuires an "1@rate o, return ,rom its in-estmenet 'oring a$ital eual to 12@o, re-enues in the oming &ear. +.e./ at timreo-ered a,ter the $roNetEs end.

a9 >alulate the )P= and +CC ,or the $roNet. Should the om$an& undertab9 "he mareting and o$erations de$artment disagree 'ith urrent $roNetiinitial re-enues/ and re-enues gro'th deline9 the $roNet 'ill breaAe-en 9 *ooing at $erentage di,,erene bet'een the $redited le-el and ritial


6/17

)(P?" B #5/100/000

PlusD e$reiation !6/000/000

>hange in )I> A 1#1/100/000

?,terA"ax >ash ,rom ?sset Sale

44>4 B 600/000/0009 QQQ

AB B !/7#1/120

0RR 17.#1%

,nalysis )P= and +CC are both $ositi-e and gra

b'

.ase case .rea=6even

-perating costs (@ of revenues) 70.00% 8'&&

Year " revenues B 500/000/000

Revenues growth (decline) 20.00%

>ash ,lo' estimation 2 "

+n-estment B 600/000/0009

Ce-enues 500/000/000

($erating osts #50/000/000

H+"? B 150/000/000*essD e$reiation !6/000/0009

+nremental H+" B 5/000/000

*essD "axes 18/!00/000

)(P?" B #5/100/000

PlusD e$reiation !6/000/000

>hange in )I> A 1#1/100/000

>ash ,rom ?sset Sale

44>4 B 600/000/0009 QQQ

AB B 172/!#0/##890RR A0.1!%

c' oo=ing at percentage difference between the predicted level and critical

b) The mar=eting and operations department disagree with current projone factor at a time at what level of operating costs initial revenues and


7/17

.ase case .rea=6even

-perating costs (@ of revenues) 70.00% $3'22@

Year " revenues B 500/000/000 ; $32222222

Revenues growth 20.00% "3'22@

Your ans'er.under the b situation 'e 'ill not ae$t the $roNet


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R-.+M 1

M,4R* $ Year /epreciation ,sset .oo= Balue

Year 1 20.00% B50/000/0009

Year 2 #2.00% B#50/00/0009

Year # 1!.20% B258/20/0009

Year 11.52% B202/!/0009

Year 5 11.52% B17/68/0009Year 6 5.76% B120/000/0009

>ost A Sol-age =alue B 80/000/0009

*olution

Year

1 & 3 $

600/000/000 720/000/000 86/000/000 1/0#6/800/000

20/000/000 50/000/000 60/800/000 725/760/000

B 180/000/000 B 216/000/000 B 25!/200/000 B #11/00/000

B 15#/600/0009 B !2/160/0009 55/2!6/0009 82/!/0009

B 26/00/000 B 12#/80/000 B 20#/!0/000 B 228/0!6/000

!/20/000 #/#/000 71/#66/00 7!/8##/600

anagement antii$ates that ne' s&stem 'ill ha-e the ,irst &ear re-enues o, ;$22222O 'i

e &ear antii$ated li,e and 'ill be de$reiated using five year M?>CS de$reiation meththis is not a t&$o9. Fo'e-er/ the om$an& 'ill be able to sell the eui$ment on the a,terAmt and ,aes a &$@tax rate overall the company is profitable9. +n addition to a$ital in-e

e 0 beginning o, &ear 19 net 'oring a$ital reuirement is B"22222O and 'ill gro' in s

the $roNet see ha$ter 2 ,or details9ns ,or o$erating osts/ ,irst &ear re-enues and re-enue gro'th . >onsidering one factor atP=J09 see ha$ter # ,or details9

breaAe-en9 le-el o, eah o, the three ,ators/ 'hih o, them is the most ritial see ha$


9/17

B 17/160/000 B 80/!6/000 B 1#2/5#7/600 B 18/262/00

15#/600/000 !2/160/000 55/2!6/000 82/!/000

170/760/000 172/656/000 187/8##/600 2#1/206/00

B120/000/000

B 170/760/000 B 172/656/000 B 187/8##/600 QQQ

ter then reuired rate o, return so 'e ae$t the $roNet.

1 & 3 $

00/000/000 #20/000/000 256/000/000 20/800/000

280/000/000 22/000/000 17!/200/000 1#/#60/000

B 120/000/000 B !6/000/000 B 76/800/000 B 61/0/00015#/600/0009 !2/160/0009 55/2!6/0009 82/!/0009

B ##/600/0009 B #/80/000 B 21/50/000 B 21/50/0009

A 1/#/000 7/526/00 A

B ##/600/0009 B 2/!6/000 B 1#/!77/600 B 21/50/0009

15#/600/000 !2/160/000 55/2!6/000 82/!/000

120/000/000 !/656/000 6!/27#/600 61/0/000

B120/000/000

B 120/000/000 B !/656/000 B 6!/27#/600 QQQ

(brea=6even) level of each of the three factors which of them is the most critical>

ections for operating costs first year revenues and revenue growth ' 4onsideringrevenues growth the project will brea=6even (ABC2)> (see chapter & for details)

Using Goal Seek


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i,,erene %9

16.00%

108.00%

6.00%


11/17

*olution egend


4ormulaalulation


12/17

*core Ma!imum

# 5

*core Ma!imum

2 7

*core Ma!imum

Author:/rong approach


13/17

1 #


14/17

R-.+M &

?iven

&"6Mar6"8

iabilities and -wnersD 4apital

>urrent *iabilities

?ounts $a&able B 7/550/000

)otes $a&able 10/000/000 10/000/000

(ther urrent liabilitiesR 22/266/000

"otal urrent liabilities B #!/816/000 B 10/000/000

B #00/000/000 B #2/5!0/82

"otal liabilities B ##!/816/000 B ##/5!0/82

('nersE >a$ital

B 20/000/000

PaidAinAa$ital 200/025/000

?umulated earnings 255/000/000

"otal o'nersE a$ital B 75/025/000 B 1/00/000/000

"otal liabilities and o'nersE a B 81/81/000 B 1/7#/5!0/82

LS "reasur& Hond Yield 2.70%

stimated Maret or uit& Cis Pr 5.00%

>urrent Share Prie B 70.00

Maret -alue o, o'nersE euit& 1/00/000/000

>urrent &ield on the ,irmEs longAterm .25%

.alance *heet(.oo= Balues)

0nvested 4apital(Mar=et Balues)

*ongAterm debt 6.5% interest $aidsemiannuall&/ due in Marh 20209

>ommon sto at B1 $ar -alue$er share9

*M +n. has the balane sheet as sho'n belo'.

Ceentl& the &ield on bonds similar to the ones that om$an& has had dro$$ed to3'1$%/ so ththe bonds is no' about ;&1$ million"he rate on om$an&E shortAterm notes is eual the maretEs rate on these notes/ 'hih is 1'%$

a9 Ihat are the om$an&Es enter$rise -alue and a$ital struture 'eightsb9 Ihat is the om$an&Es ost o, euit& aording to >?PM/ i, the L.S. "Abond &ield is 1'92

maret ris $remium is $'22% and the om$an&Es le-ered euit& beta is "'19 Ihat is the om$an&Es I?>>


15/17

>urrent &ield on the ,irmEs shortAterm 2.!5%

ollar -alue o, short term notes outs B 10/000/000

>or$orate tax rate #5%

*olution

a)

nter$rise -alue J Maret a$italiation ebt B 1/7#/5!0/82

Aotes payable 7 +nterprise Balue 2'$:@

ong6Term /ebt 7 +nterprise Balue "%'1%@

+quity 7 +nterprise Balue :2'9"@

b'

,fter6Ta! 4ost of *ources of 4apital

)otes Pa&able a,terAtaxes9 1.!2%*ongAterm ebt a,terAtaxes9 2.76%

*e-ered euit& beta 1.20

4ost of +quity (using the 4,M) :'92@

c'


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*olution egend


4ormulaalulation


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*core Ma!imum

2.5 #

*core Ma!imum

*core Ma!imum

# #

ilities areebt

eights are100

Muyiwa Ogun Ajala Jun 25 2016 1005 Ogun Ajala Fin630 Midterm

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