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Calibri 11 - AP = = AutoSum Wrap Text General TIX Normal @ Bad AY MT Fill Paste X Cut LG Copy * Format Painter Clipboard B I U A % 4 00 3 Merge & Center Conditional Format as Formatting Table Good Insert Delete Format Neutral Sort & Find & Filter Select Analyze Data Sensitivity Clear Undo Font Alignment Number Styles Cells Editing Analysis Sensitivity H25 X fx 0 P R S T U v w Y 7 AA AB 1 4 B D F G H J L M N Currently the firm has 1 million shares outstanding, each sells for $20, total worth of shares: $20 million 2 Currently firm has assets (buidings, equipment, patents etc) worth $20 million. All financed by shares (called equity) and no debt. 3 The firm has an investment project requiring $10 million. There are 3 financing plans: all new equity, half & half, all debt Fill in the YELLOW cells assuming the economy does POORLY and the firm realizes a 4% return on assets (ROA=0.04) 5 6 ROA= 0,04 FNANCING PACKAGE FINANCING PACKAGE interest rate on debt 7 1 2 3 1 2 3 0,1 8 Operating Earnings in millions $1,20 $1,20 $1,20 Assets in millions $30,00 $30,00 $30,00 9 interest expense in millions $0,00 Debt $0,00 10 Earnings for owners in millions $6,00 Equity $30,00 11 Number of shares in millions # of shares in millions 12 Earnings per share EPS Debt/Equity Ratio 13 Debt/Assets Ratio 14 10% 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 01 02 3 014