企业财务代写 CORPORATE FINANCE代写 Final Test代写

CORPORATE FINANCE

Final Test/Exam

Duration: 2 h

企业财务代写 Case 1 – Evaluation of Investment Projects (5 p) Thirsty, Inc. will proceed with a new investment that involves an initial investment of € 600,000

Case 1 – Evaluation of Investment Projects (5 p)

Thirsty, Inc. will proceed with a new investment that involves an initial investment of € 600,000 to be made in Year 0 and which should involve obtaining an annual cash flow of € 400,000 during the life of the project, which is only 2 years. In those cash flows, taxes on profits are already reflected at the rate of 25%. There are no investments in Working Capital (or Working Capital Required) and no residual value is expected. Due to the high risk of the project, the shareholders want a return of 15% per year, without the effect of the financing, that is, only with a premium for the economic risk of the project.

a) What will be the NPV of this project? (3 p)

b) Now consider that for your financing it will be possible to obtain two grants of€200,000 each. One of them is non-refundable and the other refundable (without interest) with equal annual refund. The normal interest rate for loans for this project would be 5% and the tax rate referred to above is 25%. In these conditions, determine the net present value of financing of these grants and the resulting APV. (2 p)

Case 2 – Capital structure and evaluation of projects with debt (6 p) 企业财务代写

The company ABC has a share capital of 1 million shares, with a quotation of 10 Euros each. The market value of the financial liability corresponds to 125% of its nominal value, which is 8 million Euros. The cost of debt, before taxes, is 3% per year. The leveraged beta of the company’s shares is 1.7. The return on risk-free investments is 3% and the average market risk premium is 6%. The tax rate on profits is 30%.

Answer to each of the following questions by selecting the correct option.

a) At what discount rate should the company evaluate replacement investment projects, not considering the effects of the financing decision?

☐ a. 5.25%

☐ b. 8.10%

☐ c. 9.00%

☐ d. 11.10%

☐  e.   None of the above. The correct answer is:  _______________

b) At what discount rate should the company evaluate replacement investment projects and with the same indebtedness capacity, considering the effects of the financing decision?

☐ a. 5.25%

☐ b. 8.10%

☐ c. 9.00%

☐ d. 11.10%

☐  e.   None of the above. The correct answer is:  _______________

c) At what discount rate should the company evaluate expansion investment projects with a 50% debt-to-equity target, considering the effects of the financing decision?

☐ a. 5.25%

☐ b. 8.10%

☐ c. 9.00%

☐ d. 11.10%

☐  e.   None of the above. The correct answer is:  _______________

d) Assuming that the value of the company’s shares in the market corresponds to its fair value given by DCF and that the value of the non-operating assets is null, determine the company’s EBIT considering that it generates a constant perpetual cash flow?

☐          a.   1.100 million of euros

☐          b.   1.530 million of euros

☐          c.  2.186 million of euros

☐          d.    2.725 million of euros

☐          e.    None of the above. The correct answer is:  ________________

Case 3 – Company Valuation (5 p) 企业财务代写

For Sale, Inc. whose Year 0 balance sheet (last historical year) has an invested capital of€50 million, non-operating assets of€5 million and financial debt of€30 million, with its share capital represented by 2.5 million shares. In Year 1, the company is expected to achieve a Sales Volume of 100 million, with an EBIT after income taxes of 15 million and the same capital invested as the previous year. From then on, the company should grow at a constant and perpetual annual rate of 2%.

a) Considering a 10% WACC, determine the Enterprise Value, Firm Value, Equity Value and the Value of each Share of this Company (3 p)

b) What is the MVA implicit in your Valuation and what will be the expected EVA value for Year 1 and the respective EVA spread? (2 p)

Case 4 – Short-term financial management (4 p) 企业财务代写

a) A treasury manager considers making a bank deposit for a period of 180 days at an annual interest rate of 2.00% (interest paid after 180 days) or, alternatively, he will be able to take advantage of the 0.75% cash discount corresponding to invoice advances for a period of 2 months. What decision to make? (2 p)

b) After 2 months, the company does not have the funds to advance payment to suppliers in order to continue to take advantage of the prompt payment discounts in a). Considering that the company has a bank overdraft at an annual interest rate of 1.75% (interest paid monthly), subject to stamp duty on interest of 4% and credit opening stamp duty of 0.04% per month, which is the recommendation you give to the treasury manager? (2 p)

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