Note that the exercises in this workbook are incomplete and may contain errors.

I used Excel to experiment with the parameters of some of the exercises since it
allows me to explicitly specify and model the relationships between variables
and eliminates arithmetic mistakes. In some cases I abandoned the worksheet
before finishing since I felt comfortable I had understood the principle.
If you use this workbook be careful: If the results do not match the provided
answers then they may be completely off-base.

T0
T1
I

3000
5328
11%

Q1.1
Present Value of T1
Maximum T0

4800
7800

Q1.2
Maximum T1

8658

Q1.3
T0
Maximum T1

5000
3108

Q1.4
T1
Maximum T0

7548
1000

Q1.7
-1000
-500
-1500
Q1.9

1250 1126.126 126.1261

650 585.5856 85.58559
1650 1486.486 -13.5135
198.1982
211.7117

Interest

10%
t0

t1

t2

t3

Location 1
Location 2
PV L1
PV L2

0
-2500
-2500
-2500
-2500

1
1200
1300
1090.9
1181.8

2
1300
1300
1074.4
1074.4

3
1450
1300
1089.4
976.7

754.7
732.9

Interest
PV L1
PV L2

25%
-2500
-2500

960
1040

832
832

742.4
665.6

34.4
37.6

Q1.15
PV

Cumulative PV

8000
1
2
3
4
5
6
7
8
909.0909 826.4463 751.3148 683.0135 620.9213 564.4739 513.1581 466.5074
1735.537 2486.852 3169.865 3790.787 4355.261 4868.419 5334.926

Q1.16
1
2
3
4
5
6
7
8
1 1.008333 1.016736 1.025209 1.033752 1.042367 1.051053 1.059812
2.008333 3.025069 4.050278 5.084031 6.126398 7.177451 8.237263
63.66604
Q1.17

723.8699

9
10
11
12
13
14
424.0976 385.5433 350.4939 318.6308 289.6644 263.3313
5759.024 6144.567 6495.061 6813.692 7103.356 7366.687

9
10
11
12
1.068644 1.077549 1.086529 1.095583
9.305907 10.38346 11.46998 12.56557

15
16
17
239.392 217.6291 197.8447
7606.08 7823.709 8021.553

18
179.8588
8201.412

0
-919.97

2
40
1040
0.921489 0.849142
919.9675 36.85957 883.1079
DCF

YTM
Coupon rateFace Value
8.52%
4%
1000

36.36364 883.6064
1.176995
1.084894
1.069995

0
-1025.49

2
100
1100
0.921154 0.848524
92.11538 933.3768

YTM
8.56%

10%

1000

1.114702 55.41193
59.28987
1.069984

Debt
Market Value Ratio
Required Rate

Equity
0.25
12%
2%

0.75
16%
12%

13.5%

1
10000
-3000

2
14000
-6000

-4122.47
2877.53

-5095.84
2904.16

3
9000
-4000
1000
-1065.33
4934.67

Customers
Operations
Assets
Government
Total

-7000

PV

-7000 2535.269 2254.389 3374.975 1164.632

Q4.5
Unleveraged Return
PV

-7000

15.07%
-7000 2500.678 2193.291 3238.708

Interest
Principal
Corporate tax rate
Interest tax shields
PV of ITS

-244.94
-443.83

-191.68
-510.39

-130.44
-1086.96

932.677

-2041.18

50%
122.47
95.84
65.22
109.3482 76.40306 46.42231 232.1736
1164.851

Year
Revenues
Receivables Delayed
Prior Receivables
Inventories
Accounts Payable
Repairmen
Direct Operating Costs
Admin overhead
Counter-service manager
Marketing Surveys
Vans
Cellular phones

-25000
-54000
-4000

Depreciation: Vans
Depreciation: Phones
Income
Tax
Cash Flow from Operations
Cash Flow

-25000
13000
-83000
-70000

1
75000
-15000
-7500
7500
-20000
-11250
-15000
-10000
-15000

2
150000
-30000
15000
-7500
7500
-40000
-22500
-30000
-10000
-10000

3
250000
-50000
30000
-10000
10000
-46000
-37500
-50000
-10000
-10000

4
275000
-55000
50000
-2500
2500
-52900
-41250
-55000
-10000
-10000

-15000
-1000

-15000
-1000

-15000
-1000

-1000

-12250
6370
-11250
-4880

21500
-11180
22500
11320

80500
-41860
76500
34640

104850
-54522
100850
46328

5
302500
-60500
55000
-2750
2750
-60835
-45375
-60500
-10000
-10000
15000

125790
-65410.8
125290
59879.2

60500
30250
-30250

Exc: 6.3
Discount rate
Period
Investment 1
Investment 2
NPV 1
NPV 2

8%
0
1
2
-1500
180
1680
-1000
130
1130
-1500 166.6667 1440.329
-1000 120.3704 968.7929

107.00
89.16

IRR 1
IRR 2

10%
10%

-1500 163.6364 1388.43

-1000 118.1818 933.8843

52.17
52.17

IRR 1
IRR 2

12%
12%

-1500 160.7143 1339.286

-1000 116.0714 900.8291

0.12
17.02

IRR 1
IRR 2

12.005%
13.005%

-1500 160.7071 1339.166

-1000 115.0392 884.8774

-0.01
0.05

Exc 6.4
Incremental cash flow
Investment 2 - 1
8%
9%
10%
11%
12%

Exc 6.8
S
H
F

-500
-500
-500
-500
-500
-500

50
46.2963
45.87156
45.45455
45.04505
44.64286

17.91
8.89
0.10
-8.45
-16.78

0.71
2.40
3

0.64
3.04
4

NPV
210
30
95

S+H
H+F
S+F

240
125
305

15
15
0

255
140
305

S+F+H

335

-10

325

Exc 6.9

12%
0.89
0.89
1

0.80
1.69
2

Year
Echh

550
471.5364
462.924
454.5455
446.3923
438.4566

0
-53000

0.57
3.60
5

-53000
Ugh

-13250
-11830.4

-13250
-10562.8

-13250
-9431.09

-10600
-9464.29

-10600
-8450.26

-10600
-7544.87

-84824.3
-35316.5

-66300
-66300

-10600
-6736.49

-98495.9
-32428.2

NOSE
Tax rate
Debt portion
Equity portion
Debt beta
Equity beta
Ungeared beta

0.5
0.35
0.65
0.2
1.20
0.85

Risk-free rate
Market rate

10.00%
19.10%

Revenue ratio
Fixed ratio
Project Beta

1.50
1.40
1.785

Cyrano debt portion

Cyrano equity portion

30%
70%

Cyrano debt rate

Cyrano debt beta
Cyrano equity beta
Cyrano equity rate
NOSE equity rate

15%
0.55
2.31
31.1%
20.9%

Cyrano WACC

24.0%

NOSE debt rate

NOSE WACC

11.8%
15.7%

Share dilution

Current assets
Total assets
Current liabilities
Long-term debt
EBIT
Interest
Taxes
Earnings
Dividends

Current ratio
EBIT/Total Assets
Long-term debt / Total assets
Dividends/Proft after taxes

1.033333

137.7
550.7
65
230
154.2
32.2
73.944
48.056
10.3

2.118462
0.280007
0.41765
0.214333

Option Equity
Option Debt
157.7
700.7
65
230
182.5
32.2
88.66
61.64
10.3

2.426153846
0.260453832
0.328243185
0.167099286

157.7
700.7
65
305
182.5
42.7
88.66
51.14
10.3

2.426153846
0.260453832
0.435279007
0.2014079

Daily interest
Sales Price
Variable cost
Working Capital
Sales/day
Collection period (days)
Bad debt
PV Sales receipts
Variable Cost
Working Capital Investment

0.04%
250
175
20%
125
40
4%

100
35
3%

29523.91 23912.93
21875.00 17500.00
99.18
69.50

5610.98
4375.00
29.69
1206.30

Advance interest
Compensating balance

60000
14%
8400
10%
6000
45600
1.184211

Q10.4
D
T
i

Transaction size
# Transactions
Average balance

4000000
42
13%
336000000
2584615385
50839.11
78.68
25419.56

Q10.5
s
Annual interest
s^2
i
T
M

4000
12%
16000000
0.033%
15
50000

Return point
Upper limit
Sale amount (R-M)

58180.78
74542.34
8180.78

Q10.6
Daily interest
Variable cost
Working Capital

0.03%
80%
20%

Annual sales
Sales/day
Collection period (days)
Bad debt

650000
1780.82
65
4%

575000
1575.34
40
3%

PV Sales receipts
Variable Cost
Working Capital Investment

1676.58
1424.66
6.88

1509.86
1260.27
3.76

Q10.7
Discount percentage
Discount days
Effective rate

2%
20
44.585%

-166.72
-164.38
-3.12
0.78

Incaland
UK

13.36%
10.24%

Q11.2
1.0283019
5.1415094

Q11.3
Real Interst
Incaland
UK

4%
9.00%
6.00%

Q11.6
88214.538
17642.908

Q12.4
S0
X
u
d
rf

25
22
1.2
0.7
10%

Cu
Cd

8
0

Y
Z

0.64
-10.1818

C0

5.818182