# attacted is the corpate finance assignment that needs to be done on one excel sheet but using different tabs for each problem

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attacted is the corpate finance assignment that needs to be done on one excel sheet but using different tabs for each problem

Answered 5 days AfterFeb 25, 2024

## Answer To: attacted is the corpate finance assignment that needs to be done on one excel sheet but using...

Sandeep answered on Mar 01 2024
pROBLEM P17-4
Every year cash outflow = year-end-cash-flow (1 -tax rate)
\$25,200 * (1-.21)
\$19,908.00
CFAT(y=1)    \$19,908.00
CFAT(y=2)    \$19,908.00
CFAT(y=3)    CFAT + Termination Value
\$19,908 + \$5000
\$24,908
.00
A                    B
Year     Payment    Maintenance    Depreciation    PBIT    Interest    PBT    Taxes @ 21%    PAT    CFAT (A + B)
1    \$25,844    \$1,800.00    \$9,122.52    \$18,521.48    \$8,400.00    \$10,121.48    \$2,125.51    \$7,995.97    \$17,118.49
2    \$25,844    \$1,800.00    \$9,122.52    \$18,521.48    \$5,958.00    \$12,563.48    \$2,638.33    \$9,925.15    \$19,047.67
3    \$25,844    \$1,800.00    \$9,122.52    \$18,521.48    \$3,174.00    \$15,347.48    \$3,222.97    \$12,124.51    \$21,247.03
PVIF @ 8% for 1, 2 and 3 years
r =    after tax cost of debt
t =     time period
PV Factor    1/(1+.08)^t
Lease Method : CFAT
Year     CFAT    PV Factor    PV(CFAT)
1    \$19,908.00    0.9259259259    \$18,433.33
2    \$19,908.00    0.8573388203    \$17,067.90
3    \$24,908.00    0.793832241    \$19,772.77
\$55,274.01    A
Purchase Method:
Year     CFAT    PV Factor    PV(CFAT)
1    \$17,118.49    0.9259259259    \$15,850.45
2    \$19,047.67    0.8573388203    \$16,330.31
3    \$21,247.03    0.793832241    \$16,866.58
\$49,047.34    B
Firem should purchase Equipment since they will be saving \$6,227
Total Cash saving      A - B
-\$6,226.67
Working notes
Year     Annual Payment    Principal    Interest    Interest Amount    Principal component    Year end Principal o/s
1    \$25,844    60000    14%    8400    \$17,444    \$42,556
2    \$25,844    \$42,556    14%    5958    \$19,886    \$22,670
3    \$25,844    \$22,670    14%    3173.8    \$22,670    -\$0
Problem P17-9
a    No. of Shares to be convereted     2.5    A
Current Stock Price    \$50.00    B
Conversion Value     A * B
Conversion Value    \$125.00
b    No. of Shares to be convereted     12.5    A
Current Stock Price    \$42.00    B
Conversion Value     A * B
Conversion Value    \$525.00
c    No. of Shares to be convereted     100    A
Current Stock Price    \$10.50    B
Conversion Value     A * B
Conversion Value    \$1,050.00
Problem P18-1
a    If Connors does not make the acquisition, the company's tax liability and earnings after taxes each year over the next 15 years can be calculated as follows:
Since Connors did not acquire Salines Boots, they wikll n ot be able to utilize Tax loss carryover     \$800,000.00
Tax Liability    Taxable Income * Corporate TaX rate
Earning Before Tax (EBT)    \$280,000.00    A
Corporate Tax...
SOLUTION.PDF