Finance Math Problems

Anonymous
timer Asked: Nov 21st, 2016

Question description

Complete the following problems below in the attached Excel spreadsheet.

Beta
NPV and IRR

Cost of Capital

see instructions at row 30 DATE 31-Dec-03 31-Dec-04 31-Dec-05 31-Dec-06 31-Dec-07 31-Dec-08 31-Dec-09 31-Dec-10 31-Dec-11 31-Dec-12 31-Dec-13 31-Dec-14 31-Dec-15 Yahoo Stock SP 500 Stock Price Price (SPY) $23.00 $47.00 $39.00 $28.00 $25.00 $13.00 $16.00 $17.00 $16.00 $20.00 $40.00 $50.00 $35.00 $104.00 $116.00 $124.50 $141.62 $147.30 $92.96 $114.57 $125.75 $125.50 $140.03 $183.85 $205.43 $190.00 You show your work for partial credit. Above, you will find yearly stock prices for Yahoo Inc. and for the SP 500 Market Index. beta using the above data. You include all the steps we went over with the Sales Force you have a different number of years worth of data here so you want to pay attention to t compute your formulas for number of years. Also, you compute the geometrical returns and c18 of the beta.xlsx example we went over in class. . and for the SP 500 Market Index. You compute Yahoo's we went over with the Sales Force Example in class. Note, ere so you want to pay attention to this point when you ou compute the geometrical returns showing up in cells b18 ss. Year 0 1 2 3 4 5 6 7 8 9 10 Cash Flows -$50,000,000 $7,000,000 $7,000,000 $7,000,000 $7,000,000 $10,000,000 $10,000,000 $10,000,000 $12,000,000 $12,000,000 $28,000,000 You show your work for partial credit. Above, I am including the projected cash flows for a long term capital project. The (negative numbers represent cash outflows and positive numbers represent cash inflow plus the company stops the projects and sells off the project for an addition inflows at year ten equals $28 Million. The company wishes to earn 12% on this p for the above project. ong term capital project. The project has the following cash flows ive numbers represent cash inflows. Note: YR 10 = $12 Million off the project for an additional $16 Million inflow. Thus, total wishes to earn 12% on this project. You compute the NPV and IRR You show your work for partial credit. Here, we are dealing with cost of capital. You can use the same format as we used in the Cost of over in class during week three. ZT Inc has $100 Million debt with a 5% interest charge. ZT pays taxes at 35%. ZT has $300 Millio sheet. ZT Inc has 1.5 Beta for its stock. The Risk Free Interest Rate is 3%. And, the Market premiu Assumed Market Return Less 3% Risk Free Rate). Using the format, I used in the spreadsheet we ZT’s cost of capital. format as we used in the Cost of Capital slides and excel sheet we went taxes at 35%. ZT has $300 Million Market Value Equity on its balance te is 3%. And, the Market premium for the stock market is 5% (8% mat, I used in the spreadsheet we went over in class, you can compute
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