Muyiwa Ogun Ajala Jun 25 2016 1005 Ogun Ajala Fin630 Midterm

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    Grading Sheet

    Problem Your Points Maximum

    17 25 68.0%

    6 15 0.0%

    !.5 10 !5.0%

    "otal #2.5 50 65.0%

    Problem 1

    Problem 2

    Problem #

    "his exam is o$en boo and is to be &our individual'or ()*Y. Yobeginning of semester). +, &ou ha-e uestions about the exam/ $leasemight ha-e the same uestion. + also reser-e the right to delete $osts or

    You must sho' all &our 'or ,or ,ull redit sho'ing &our 'or 'ill alnumber is not enough you have to give your recommendation or eah $roblem is loated in a se$arate s$readsheet tab/ 'hih inludes tha-e to use them. +, &ou deide to use them/ then it is your responsibilnumbers in the text box and numbers in the tem$late/ $lease use the nu

    Please $ut &our name on &our exam and in the title of your filesas 'enamed :4+)6#0.; -en i, &ou deide not to use the tem$lates/ $lease :Problem 1/; :Problem 2; et. to identi,& the uestions

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    *olution egend

    =alue gi-en in $roblem

    4ormulaalulation

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    ee 'ho

    ust a

    don3t

    ,ilessheets

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    R-.+M "

    *olution

    a' /ownload Financial /ata

    0n Thousands unless otherwise specified /ec &" 12"$ /ec &" 12"3 /ec &

    ,ssets 4urrent

    >ash and ash eui-alents B17/08# B225/#00 B

    Cestrited ash B12/017 B11/!50

    Settlements reei-able B156/188 B115/81

    Merhant ash ad-ane reei-able/ net B#/6#8 B2!/#02

    (ther urrent assets B#2/561 B27/8#

    "otal urrent assets B18/87 B0!/867 BPro$ert& and eui$ment/ net B85/012 B6#/7##

    Good'ill B56/8!! B0/267

    ?uired intangible assets/ net B20/726 B10/27!

    Cestrited ash B1/57! B1/#!

    (ther assets B2# B#/#8

    "otal assets B5!5/!6 B51/888 B

    >urrent liabilitiesD

    ?ounts $a&able B7/528 B5/#6

    >ustomers $a&able B2#8/085 B18/68

    ?rued transation losses B16/00 B8/52

    ?rued ex$enses B#5/66! B17/#68

    (ther urrent liabilities B1#/!5 B11/202

    "otal urrent liabilities B#11/20 B1!1/106 B

    ebt B0 B#0/000 (ther liabilities B50/2 B7/110

    "otal liabilities B#61/8 B268/216 B

    >ommitments and ontingenies )ote 169

    Stoholders3 euit&D

    >on-ertible $re,erred sto B51/!5 B51/!5 B

    >ommon sto B0 B0

    ?dditional $aidAin a$ital B2!/!5 B155/166

    ?umulated other om$rehensi-e loss B1/2779 B8079

    ?umulated de,iit B52!/1609 B#!5/6#29 B

    "otal stoholdersE euit& B2#/62 B27#/672 B

    "otal liabilities and stoholdersE euit& B5!5/!6 B51/888 B

    0ncome *tatement Year ended /ecember &"

    +n "housands/ exe$t Per Share data 12"$ 12"3 12Ce-enues

    "ransation re-enue B751/!2! B707/7!! B

    "his exerise ass &ou to ,oreast Suare S@9 ,ree ash ,lo' and disuss riss the om$an& is tem$late belo' or &ou ma& reate &our o'n tem$late.

    a9 do'nload 201#A2015 historial ,inanial data ,or the om$an&/ using one o, the soures listetem$late belo' or reate &our o'n9. + reommend using 2H $ros$etus9 ,iling 'ith the S

    b9 Hased on historial ,inanial data alulate ratios that to be used later in $roA,orma ,inanial ha$ter 6 ,or details99 Lsing historial data ,rom a9 and ratios ,rom b9 reate $roA,orma statements see ha$ter 6 ,od9 stimate ,ree ash ,lo's 4>4 ,or 2016A201! see ha$ters 2 and 6 ,or details9

    e9 Ihat are riss the om$an& is ,aing isuss/ ho' its tornado diagram 'ould loo lie seediagram itsel,/ unless &ou 'ant to earn bonus $oints 5 $oints maximum9

    Author:

    These numb ers are for#eptember 30$ 2015

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    ?iven

    +n-estment ost toda&9 B 600/000/0009

    ProNet *i,e 5 &ears

    )et Ioring >a$ital 20.00% o, re-enues

    Year 1 re-enues B 500/000/000

    ($erating osts 70.00% o, re-enues?,terAmaret sal-age9 -alue 20% o, initial in-estment

    Ce-enue annual gro'th 20.00%

    Ceuired rate o, return 12.00%

    "ax rate #5%

    a'

    >ash ,lo' estimation 2 "

    +n-estment B 600/000/0009

    Ce-enues 500/000/000

    ($erating osts #50/000/000

    H+"? B 150/000/000

    *essD e$reiation B !6/000/0009

    +nremental H+" B 5/000/000

    *essD "axes 18/!00/000

    MacroHardonsiders selling a =irtual Cealit& de-ie set HoloGlobe. "he12@'($erating osts are 92@o, re-enues.

    "he $roNet reuires ;822Mil in-estment in eui$ment/ 'hih 'ill ha-e a ,iM?>CS o,,iial de$reiation rates are gi-en belo' A it does reuire 6 &ears/original ost. "he om$an& reuires an "1@rate o, return ,rom its in-estmenet 'oring a$ital eual to 12@o, re-enues in the oming &ear. +.e./ at timreo-ered a,ter the $roNetEs end.

    a9 >alulate the )P= and +CC ,or the $roNet. Should the om$an& undertab9 "he mareting and o$erations de$artment disagree 'ith urrent $roNetiinitial re-enues/ and re-enues gro'th deline9 the $roNet 'ill breaAe-en 9 *ooing at $erentage di,,erene bet'een the $redited le-el and ritial

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    )(P?" B #5/100/000

    PlusD e$reiation !6/000/000

    >hange in )I> A 1#1/100/000

    ?,terA"ax >ash ,rom ?sset Sale

    44>4 B 600/000/0009 QQQ

    AB B !/7#1/120

    0RR 17.#1%

    ,nalysis )P= and +CC are both $ositi-e and gra

    b'

    .ase case .rea=6even

    -perating costs (@ of revenues) 70.00% 8'&&

    Year " revenues B 500/000/000

    Revenues growth (decline) 20.00%

    >ash ,lo' estimation 2 "

    +n-estment B 600/000/0009

    Ce-enues 500/000/000

    ($erating osts #50/000/000

    H+"? B 150/000/000*essD e$reiation !6/000/0009

    +nremental H+" B 5/000/000

    *essD "axes 18/!00/000

    )(P?" B #5/100/000

    PlusD e$reiation !6/000/000

    >hange in )I> A 1#1/100/000

    >ash ,rom ?sset Sale

    44>4 B 600/000/0009 QQQ

    AB B 172/!#0/##890RR A0.1!%

    c' oo=ing at percentage difference between the predicted level and critical

    b) The mar=eting and operations department disagree with current projone factor at a time at what level of operating costs initial revenues and

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    .ase case .rea=6even

    -perating costs (@ of revenues) 70.00% $3'22@

    Year " revenues B 500/000/000 ; $32222222

    Revenues growth 20.00% "3'22@

    Your ans'er.under the b situation 'e 'ill not ae$t the $roNet

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    R-.+M 1

    M,4R* $ Year /epreciation ,sset .oo= Balue

    Year 1 20.00% B50/000/0009

    Year 2 #2.00% B#50/00/0009

    Year # 1!.20% B258/20/0009

    Year 11.52% B202/!/0009

    Year 5 11.52% B17/68/0009Year 6 5.76% B120/000/0009

    >ost A Sol-age =alue B 80/000/0009

    *olution

    Year

    1 & 3 $

    600/000/000 720/000/000 86/000/000 1/0#6/800/000

    20/000/000 50/000/000 60/800/000 725/760/000

    B 180/000/000 B 216/000/000 B 25!/200/000 B #11/00/000

    B 15#/600/0009 B !2/160/0009 55/2!6/0009 82/!/0009

    B 26/00/000 B 12#/80/000 B 20#/!0/000 B 228/0!6/000

    !/20/000 #/#/000 71/#66/00 7!/8##/600

    anagement antii$ates that ne' s&stem 'ill ha-e the ,irst &ear re-enues o, ;$22222O 'i

    e &ear antii$ated li,e and 'ill be de$reiated using five year M?>CS de$reiation meththis is not a t&$o9. Fo'e-er/ the om$an& 'ill be able to sell the eui$ment on the a,terAmt and ,aes a &$@tax rate overall the company is profitable9. +n addition to a$ital in-e

    e 0 beginning o, &ear 19 net 'oring a$ital reuirement is B"22222O and 'ill gro' in s

    the $roNet see ha$ter 2 ,or details9ns ,or o$erating osts/ ,irst &ear re-enues and re-enue gro'th . >onsidering one factor atP=J09 see ha$ter # ,or details9

    breaAe-en9 le-el o, eah o, the three ,ators/ 'hih o, them is the most ritial see ha$

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    B 17/160/000 B 80/!6/000 B 1#2/5#7/600 B 18/262/00

    15#/600/000 !2/160/000 55/2!6/000 82/!/000

    170/760/000 172/656/000 187/8##/600 2#1/206/00

    B120/000/000

    B 170/760/000 B 172/656/000 B 187/8##/600 QQQ

    ter then reuired rate o, return so 'e ae$t the $roNet.

    1 & 3 $

    00/000/000 #20/000/000 256/000/000 20/800/000

    280/000/000 22/000/000 17!/200/000 1#/#60/000

    B 120/000/000 B !6/000/000 B 76/800/000 B 61/0/00015#/600/0009 !2/160/0009 55/2!6/0009 82/!/0009

    B ##/600/0009 B #/80/000 B 21/50/000 B 21/50/0009

    A 1/#/000 7/526/00 A

    B ##/600/0009 B 2/!6/000 B 1#/!77/600 B 21/50/0009

    15#/600/000 !2/160/000 55/2!6/000 82/!/000

    120/000/000 !/656/000 6!/27#/600 61/0/000

    B120/000/000

    B 120/000/000 B !/656/000 B 6!/27#/600 QQQ

    (brea=6even) level of each of the three factors which of them is the most critical>

    ections for operating costs first year revenues and revenue growth ' 4onsideringrevenues growth the project will brea=6even (ABC2)> (see chapter & for details)

    Using Goal Seek

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