Looking at the template pro forma below , make this one change The firm is not going to pay an interest rate on debt which is as high as 12%, but pay 8% instead.
Looking at the template pro forma below , make this one change The firm is not going to pay an interest rate on debt which is as high as 12%, but pay 8% instead.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
1.
Looking at the template pro forma below , make this one change
The firm is not going to pay an interest rate
on debt which is as high as 12%, but pay 8%
instead.
Transcribed Image Text:Year
Free Cash Flow
PAT
Add back depreciation
9 Minus NWC
D
Minus increase in CA
1
Add back increase in CL
2 Subtract CAPEX
3 Add back net interest after taxes
4 Free Cash Flow
5
6
7 WACC
68 Long-term FCF growth
59
50 Year
51 FCF
52 Terminal value
63 Total
64
Enterprise value:
65 PV of FCFS and terminal value
66 Add back initial cash
67 Asset value
68 Subtract year 0 debt
69 Imputed equity value
70 Per share (100 shares)
71
0
20%
6%
1
1
271
109
-35
20
-179
20
206
2
2
304
128
-39
22
-205
10
221
3
3
340
150
-42
24
-235
0
237
0
206
221
237
*
206
.221
237
1,669 <=NPV(wacc, C63: G63)*(1+wacc)^0.5
1,632-B27
3,301 <=B65+B66
-1,000 <-- =-B36
2,301 <=B67+B68
23.01 <=B69/100
4
4
378
175
-47
27
-268
-10
254
254
254
5
418
204
-51
29
-307
-21
272
5
272
2,062-G61*(1+LT)/(wacc-LT)
2,334
Transcribed Image Text:BASIC TEMPLATE PRO FORMA MODEL
10%
35%
20%
70%
50%
10% <- Straight line
Sales growth, yrs 1-5
Current assets/Sales
Current liabilities/Sales
Net fixed assets/Sales
Costs of goods sold/Sales
Depreciation rate
Interest rate on debt
Interest paid on cash & marketa
Tax rate
Dividend payout ratio
Year
Income statement
Sales
1,000
Costs of goods sold
Interest payments on debt
Interest earned on cash & marketable securi
Depreciation
O Profit before tax
1 Taxes
2 Profit after tax
3 Dividends
4 Retained earnings
5
26 Balance sheet
0
27 Cash and marketable securities
28 Operating current assets
29 Fixed assets
30
Fixed assets at cost
31
Accumulated depreciation
32
Net fixed assets
33 Total assets
34
35 Operating current liabilities
36 Debt
37 Stock
38 Accumulated retained earnings
39 Total liabilities and equity
40
41 Debt/Assets, actual
42 Debt/Assets, target
43
12.00%
5.00%
34%
60%
0
Known
1,632
350
1,000
300
700
2,682
200
1,000
800
682
2,682
37.29%
1
1,100
-550
-108
77
-109
410
-139
271
-162
108
1,455
385
1,179
409
770
2,610
220
800
800
790
2,610
30.65%
37.29%
1
3
4
1,210
1,331
1,464
-605
-666
-732
-84
-60
-36
68
60
52
-128
-150
-175
461
515
573
-157
-175
-195
304
340
378
-183
-204
-227
122
136
151
3
1,284
1,117
955
424
466
512
1,384
1,619
1,887
537
687
863
847
932
1,025
2,554
2,514
2,492
242
266
293
600
400
200
800
800
800
912
1,048
1,199
2,554
2,514
2,492
23.49%
15.91%
8.03%
30.65% 23.49% 15.91%
2
"
2
*
4
G
5
1,611
-805
-12
44
-204
633
-215
418
-251
167
797
564
2,194
1,067
1,127
2,489
322
0
800
1,366
2,489
0.00%
8.03%
5
H
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