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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 $roblem
4ormulaalulation
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ee 'ho
ust a
don3t
,ilessheets
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R-.+M "
*olution
a' /ownload Financial /ata
0n Thousands unless otherwise specified /ec &" 12"$ /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 $redited le-el and ritial
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)(P?" B #5/100/000
PlusD e$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
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.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$
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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%
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*olution egend
=alue gi-en in $roblem
4ormulaalulation
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*core Ma!imum
# 5
*core Ma!imum
2 7
*core Ma!imum
Author:/rong approach
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1 #
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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$an&Es I?>>
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>urrent &ield on the ,irmEs shortAterm 2.!5%
ollar -alue o, short term notes outs B 10/000/000
>or$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
=alue gi-en in $roblem
4ormulaalulation
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*core Ma!imum
2.5 #
*core Ma!imum
*core Ma!imum
# #
ilities areebt
eights are100