Please complete this problem using the data/info listed in the word doc. and complete the assignment within EXCEL. Make sure to list the formulas you used in a clear manner for all parts of the assignment.

A B C D E F G H FINA 6301 - Hints to Ch 18 - Problems 1(b), 3 18-1 (b) Price of cars 500000 Life 5 AWN- EBTD 250000 Tax 35% R(Unlevered) 15% Dep 100000 Interest rate 10% NPV(All-Equity) NPV = -Purchase Price + PV[(1 - to )(EBTD)] + PV(Depreciation Tax Shield) Purchase Price PV[(1 - to )(EBTD)] PV(Depreciation Tax Shield) NPV(All Equity) = 13 14 NPV(Financing Side Effects) 15 NPV = Proceeds - After-tax PV(Interest Payments) - PV(Principal Payments) 17 Loan 400000 interest rate 10% 18 Interest PMT 40000 19 20 After-tax PV(Interest PMTs) = (1-T) PV(Interest PMTs) = 21 PV(Principal Payments) = 22 NPV(Financing Side Effects) = 23 24 APV = NPV(All-Equity) + NPV(Financing Side Effects) = 25 26 18-3 (a) For each restaurant 27 Sales 1500000 COGS 600000 Other Costs 350000 Interest 60000 Tax 40% 20% 28 R(Lev.Eq) 30 For three restaurants 31 Sales 32 COGS 33 Other Costs 34 Interest 35 EBT 36 Tax 37 NI 38 39 Value of the firm's equity = PV(Flow-to-equity) = NI / R(Lev.Eq) = 40 (b) B/S 0.4 A 42 43 B/S = 0.4 ==> B = 0.4 x S= 44 Total value of the firm = B + S = 45 46 Or, A/S = 14 /10 = => A =14 x S= 47Zoom FINA 6301 HW Problems - 12TH Edition Chapter 18 - Session 14 1. NPV and APV Benton is a rental car company that is trying to determine whether to add 25 cars to its fleet. The company fully depreciates all its rental cars over five years using the straight-line method. The new cars are expected to generate $245,000 per year in earnings before taxes and depreciation for five years. The company is entirely financed by equity and has a 21 percent tax rate. The required return on the company's unlevered equity is 13 percent and the new fleet will not change the risk of the company. b. Suppose the company can purchase the fleet of cars for $675,000. Additionally, assume the company can issue $450,000 of 5-year debt to finance the project at the risk-free rate of 8 percent. All principal will be repaid in one balloon payment at the end of the fifth year. What is the APV of the project? In Problem 1- Part b), use the interest rate 8% when you calculate the present value of depreciation tax savings. 3. FTE Pompeii Pizza Club owns three identical restaurants popular for their specialty pizzas. Each restaurant has a debt-equity ratio of 40 percent and makes interest payments of $42,000 at the end of each year. The cost of the firm's levered equity is 19 percent. Each store estimates that annual sales will be $1.275 million; annual cost of goods sold will be $745,000; and annual general and administrative costs will be $405,000. These cash flows are expected to remain the same forever. The corporate tax rate is 22 percent. a. Use the flow to equity approach to determine the value of the company's equity. b. What is the total value of the company