Use the following information about HCB Inc. for the next 6 questions. HCB has no non-operating...

  

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Use the following information about HCB Inc. for the next 6 questions. HCB has no non-operating assets. Year Debt FCF Interest rate on debt Tax rate (levered cost of equity) tu (Unlevered cost of equity) C. d. e. 6% 40% 10% 9% WACC 8% Growth rate 4% 1. Calculate the value of equity using the Corporate Valuation Model. a. b. $193.66 $199.47 C. d. e. $205.45 $211.61 $217.96 2. Calculate the free cash flow to equity FCFE) in Year 1. a. b. $15.16 $15.92 Now 20 $16.72 $17.55 $18.43 5 Projected 1 30 7 2 35 10 3. Calculate the value of equity using the Free Cash Flow to Equity Model. a. b. C. d. e. 4. Calculate the value of equity using the APV Model. a. $153.01 $160.66 b. $168.69 C. d. e. 5. Calculate the tax shield due to interest for Year 2. a. b. C. $222.65 $233.79 $245.48 $257.75 $270.64 $177.13 $185.98 d. $1.26 $0.79 $0.84 $1.05 e. $1.32 6. Calculate the unlevered value of the tax shield. a. $16.07 b. $16.72 C. $17.38 d. $18.08 e. $18.80 Use the following information about HCB Inc. for the next 6 questions. HCB has no non-operating assets. Year Debt FCF Interest rate on debt Tax rate (levered cost of equity) tu (Unlevered cost of equity) C. d. e. 6% 40% 10% 9% WACC 8% Growth rate 4% 1. Calculate the value of equity using the Corporate Valuation Model. a. b. $193.66 $199.47 C. d. e. $205.45 $211.61 $217.96 2. Calculate the free cash flow to equity FCFE) in Year 1. a. b. $15.16 $15.92 Now 20 $16.72 $17.55 $18.43 5 Projected 1 30 7 2 35 10 3. Calculate the value of equity using the Free Cash Flow to Equity Model. a. b. C. d. e. 4. Calculate the value of equity using the APV Model. a. $153.01 $160.66 b. $168.69 C. d. e. 5. Calculate the tax shield due to interest for Year 2. a. b. C. $222.65 $233.79 $245.48 $257.75 $270.64 $177.13 $185.98 d. $1.26 $0.79 $0.84 $1.05 e. $1.32 6. Calculate the unlevered value of the tax shield. a. $16.07 b. $16.72 C. $17.38 d. $18.08 e. $18.80

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