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Option 2: MBA
Course fee $25000 per year and duration is 3 years.
Growing Annuity : A growing annuity, is a stream of cash flows for a fixed period of time, t, where the initial cash flow, C, is growing (or declining, i.e., a negative growth rate) at a constant rate g.
Her Salary would remain 38000 and increases @3% per year for 35 years Then the Present Value of her earnings:
g = 0.03 , r = 0.0498
PV = $933613.0676
(38000*1.03)+10000 = $49140.
natasha.xlsx NPV = $1162896.587 + $70000 = $1232896.587.
Choose MBA :
Increase her salary by $20000 from 4th year.
natasha.xlsx
Additional Investments such as 10 % of initial investment for 1st year 5 % of 1st year investment for 2nd year 1% of 2nd year investment for next 3 years (3rd , 4th & 5th Years)
Free cash flows = (unlevered Net Income)+ Depreciation Cap Ex Change in NWC Unlevered Net income = (Revenues Cost Depreciation) *(1-marginal tax rate) Net Working Capital = Current assets Current Liabilities. = Cash + Inventory + Receivables - Payables Change in NWC = NWC of this year NWC of previous year.
Marginal Tax Rate : Firms Marginal corporate is a tax rate it will pay on an incremental dollar of Pre Tax income.
3557.00
(EBITDA)
4,776.00
Plant, Property and Equipment for the fiscal year ended 2006 is $3557mn
Additional investments for the next three years= $37.722mn, $38.1mn, $38.48mn respectively
Costs for the new product for the first year= $1365.09mn For the second year= $1569.85mn
For the third year= $1726.83mn For the fourth year= $1813.18mn For the fifth year= $1903.83mn
Depreciation= cost of assets/lifetime value; 355.7/10 Using straight line method over a ten year life depreciation= $35.57mn Tax rate: Income Tax/ EBIT
EBIT=4608.00 Income tax=1006 For the year end 2005 the tax rate is 21.83%
YEAR 2006
EBIT 4608
2007
3345 762 22.7 %
2008
3827 880 22.9 %
2009
3324 846 25.4 %
2010
_ _ _
Unlevered Net Income= (RevenuesCosts -Depreciation) X (1-Tc) = EBIT x 1-Tc 2006 2007 2008 2009
YEAR
ULNI
3626.13 4
2620.47
2985.31 2
2549.08 2
Considering a constant percentage of 15% of the project sales, NWC and increase in NWC would be
2006 2007 2008 2009 2010
Year
NWC
$716.4mn
$531.15m n $(185.25) mn
$619.5mn
$594.15m n $(25.35)m n
Change in NWC
$716.4mn
$88.35mn
$(594.15) mn
Free Cash Flow= Unlevered Net Income+ Depreciation- Capital expenditure- change in NWC
Year Gross Profit ULNI Plus Depreciat ion Less capital exp Less Change in NWC Free Cash Flow
355.57
35.57
37.34
37.72
38.1
716.4
185.25
88.35
25.35
3306.264
1904.2
2798.32
2458.48
2521.33
1.
2.
Diluted weighted Average shares from the income statement dated 12/31/2004 are 3902400.
Change in value = (change in stock prices) x (number of shares outstanding) Change in value = (4 2.65) x 3902400 = $5268240 From NYU cost of capital website, cost of capital for the Entertainment Tech industry is 9.02%.
Percentage stock price reaction is given by, (change in stock price)/(original stock price)*100 %age change = (4 2.65)/2.65 * 100 = 50.94%
Discussed about leading Management journal Effective Working Capital Checking Effectiveness Of BP by calculating EWC
Cash Conversion Cycle = Inventory days+Account Recievable Days-Account payable Days. Inventory Days= Inventory/Avereage Daily cost of Goods sold. Account Recievable Days=AccountRecievable/Average Daily Sales.