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All Equity Financing: Particulars ($000) 2001 2002 E 2003 E 2004E 2005E 2006 E

The document presents financial projections for an equity-financed project from 2001-2006 showing sales, EBITDA, taxes, cash flows, NPV, and cost of equity calculations, as well as an alternative financing structure using constant debt ratio showing similar projections and calculations including WACC. The equity-financed structure yields a positive NPV of $1,228 while the constant debt ratio structure increases NPV to $1,847 due to tax benefits of debt financing.

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Muskan Valbani
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65 views

All Equity Financing: Particulars ($000) 2001 2002 E 2003 E 2004E 2005E 2006 E

The document presents financial projections for an equity-financed project from 2001-2006 showing sales, EBITDA, taxes, cash flows, NPV, and cost of equity calculations, as well as an alternative financing structure using constant debt ratio showing similar projections and calculations including WACC. The equity-financed structure yields a positive NPV of $1,228 while the constant debt ratio structure increases NPV to $1,847 due to tax benefits of debt financing.

Uploaded by

Muskan Valbani
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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All Equity Financing

Particulars($000) 2001 2002 E 2003 E 2004E 2005E 2006 E


Fixed Capital Investment -1500 -300 -300 -300 -300 -300
Working Capital Investment 0 0 0 0 0 0

Sales 1200 2400 3900 5600 7500


Ebitda 180 360 585 840 1125
Depreciation -200 -225 -250 -275 -300
EBIT -20 135 335 565 825
Tax Expense 8 -54 -134 -226 -330
EBIAT -12 81 201 339 495
Add: Depreciation 200 225 250 275 300
Cashflow 188 306 451 614 795
FCFE -112 6 151 314 495
Terminal Value 4812.5
Total Cashflows -112 6 151 314 5307.5
PVCF $ 2,728.49
NPV $ 1,228.49
Cost of Equity Calculation
βa 1.5
ka 15.8%
APV method
Value of firm using all equity financing $ 1,228.49
PV of ITS $ 450.00
APV $ 1,678.49
Using Constant Debt ratio
Particulars($000) 2001 2002 E 2003 E 2004E 2005E 2006 E

Fixed Capital Investment -1500 -300 -300 -300 -300 -300


Working Capital Investment 0 0 0 0 0 0

Sales 1200 2400 3900 5600 7500


Ebitda 180 360 585 840 1125
Depreciation -200 -225 -250 -275 -300
EBIT -20 135 335 565 825
Tax Expense 8 -54 -134 -226 -330
EBIAT -12 81 201 339 495
Add: Depreciation 200 225 250 275 300
Cashflow 188 306 451 614 795
FCFF -112 6 151 314 495
Terminal Value 5637.202
Total Cashflows -112 6 151 314 6132.202
PVCF ₹ 3,346.68
NPV ₹ 1,846.68
Cost of Equity Calculation
βa 1.5
βd 0.25
βe 1.75
Debt 375 Equity 1125
Kd 6.80%
tax rate 40%
Ke 17.600%
WACC 14.22%
Notes
Risk-free Rate (Rf) 0.05
Project Cost of Debt (Rd) 0.068
Market Risk Premium 0.072
Marginal Corporate Tax Rate 0.4
Project Debt Beta (βd) 0.25
Debt Schedule

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