1.CF1 = 75CF2 = 75CF3 = 75d = 15%

FIND:Present Value (PV)

2.CF = 100g = 0d = 20%

Assume the Cash Flow is annual and perpetual

FIND:PV

3.CF0 = -100(this is the investment)

CF1 = 30CF2 = 50CF3 = 60CF4 = 90WACC = 12%

FIND:Payback in Years

4.Based upon the information in #3,FIND:Net Present Value (NPV)

5.Next years numbers include these:

EBIT = 1,000Depreciation = 250Taxes = 100

Net increase in Working Capital = 50

Net Increase in Capital Expenditure = 250

Long-term sustainable growth = 4%

Risk free rate = 3%Beta = 1.5%

Equity Risk Premium = 7%

D/E = 0.333

Investment = -$10,000(occurs at time = 0)

Cost of debt (prior to tax adjustment) = 7%

Corporate tax rate = 33%

FIND:Net Present Value (NPV). Use CFFA for cash flow and WACC for the discount rate.

6.CF0 = -6,750CF1 = 3,000CF2 = 3,000CF3 = 3,000

WACC = 14%FIND:NPV

7.RFR = 2%Beta = 1.1ERP = 6.0%D/E = 1.0

Cost of debt prior to tax adjustment = 4%

Corporate tax rate = 35%

FIND:WACC

8.CF0 = -1,000CF1 = 50CF2 = 250CF3 = 450

CF4 = 200CF5 = 1,200WACC = 8%

FIND:NPV

9.Given the cash flows in the problem above, FIND the Payback, in years.

10.Given these cash flow numbers for next year:

Net Income = 4,000

Interest Expense = 500

Depreciation = 800

Net increase in Working Capital = 100

Net Capital Expenditure = 900

Taxes = 1,000

Initial Investment = -25,000(occurs at time = 0)

Risk free rate = 5%

Beta = 2.0

ERP = 7.5%

D/E = 0.5

Cost of debt capital prior to adjustment = 6%

Corporate tax rate = 35%long term stable growth = 2.5%

FIND:NPV(use CFFA1 and WACC)