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##### I need help on finding my errors within the projec...

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Solution

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I need help on finding my errors within the project Excell workbook. When I go online to submit an attempt,I am scoring 84 out of 100 points. So several of my answers are wrong.I will past the multiple choice answer file below. Question 1 [Q #1 ] Net Present Value for "A" is (using a 15% discount rate) : Answer -$357 $357 $411 -$4,110 $839 $556 4 points Question 2 [Q #3 ] Internal Rate of Return for "A" is Answer 23.47% -19.2% -5.9% 25.44 15.22% 4 points Question 3 [Q #2 ] Net Present Value for "B" is (using a 12% discount rate): Answer $396 -$354 -$462 $188 $3,960 -$39,500 4 points Question 4 [Q #4 ] Internal Rate of Return for "B" is Answer 15.22% -15.22% -23.4 23.4%. 4 points Question 5 [Q # 7] Given a borrower has $385,000 per year to pay on a loan and given the lenders debt coverage ratio of 1.3, what is the amount the lender will allow the borrow to allocate toward a loan? (per year) Answer $385,000 $536,000 $22,333 $296,154 4 points Question 6 [Q # 6] What is the after tax, after CapEx cash flow able to service a loan? Answer $506,670 $609,344 $296,670 -$184,960 4 points Question 7 [Q # 5 ] Net Present Value of the after tax cash flows on the pro forma is Answer -$1,520,311 -$1,648,334 -1,420,978 1,462,802 $1,520,311 4 points Question 8 [Q # 8] The total amount of debt that can be serviced if $100,000 is paid each period. (Restated: Given PMT = $100k, i = 10%, n = 15, what is the loan amount (using annual compounding)) Answer $2,375,250 $760,607 $76,923 $1,257,750 $1,500,000 3 points Question 9 [Q #9 ] Given the data on worksheet "Q9 - 13", What is the WACC of company "XYZ"? Answer 12.18% 11.19% 10.4 12.0% 4 points Question 10 [Q # 10] Calculate CAPM based on "XYZ" common equity based on the data provided. Answer 11.4 % 17.5% 13% 12.04% 4 points Question 11 [Q # 12] What is the payback for project "M". (If you like, you can use a 20% discount rate). Answer about $734k $5,803 (Present value) 6 years 16% 4 points Question 12 {Q # 13] Comparing the net income yield to a CD or risk free rate of 6%, does project "M" beat the risk free rate? Compare year one if you consider the Net Income versus the Price paid for project "M". Answer Yes No 6% Trick question! 4 points Question 13 [Q # 11] What is the appropriate discount rate to evaluate this opportunity (of those provided here)? Answer Cost of marginal debt the average return for the stock market (knowing XYZ is a public company). Beta of XYZ times the stock market average. Since the risk of the project is not given, it will be assumed it is riskier that a diversified portfolio; therefore, the discount rate is greater than 17.5% 4 points Question 14 [Q # 15 ] Ranking the projects (highest to lowest) according to IRR Answer N, O, P, Q Q, P, N, O P, N, Q, O O, P, N, Q P, N, O, Q 4 points Question 15 [ Q #16 ] Ranking projects (earliest to latest) using the payback method Answer Q, P, O, N Q, O, P, N O, N, Q, P P, N, Q, O 4 points Question 16 [Q #14 ] Ranking the projects (highest to lowest) according to NPV Answer N, O, P, Q O, P, Q, N P, O, N, Q P, N, Q, O 4 points Question 17 [Q #19 ] What is the pro forma revenue calculated for year 5? Answer $896,580 $210,311 $473,508 $143,644 $2,406,820 4 points Question 18 [Q # 25 ] What is the IRR of this acquisition? Answer 18.2% 15% Cannot be determined 8% 4 points Question 19 [Q # 24 ] Using the given discount rate, what is the NPV of the acquisition? (Use your equity investment (your cash out of pocket) and the cash flows from the opportunity) Answer $1,690,126 $2,154,294 $6,482 $714,213 4 points Question 20 [Q #17] What is the purchase Price of the acquisition? Answer $30,000,000 $11,100,000 $2,835,000 $6,000,000 4 points Question 21 [Q #18 ] What is the Goodwill Amount of the Purchase Price? Answer $88,750 $1,775,000 $1,060,000 -$1,060,000 Does not exist in this problem. 4 points Question 22 [Q # 22 ] What is the net cash flow for year 2? (after debt service and CapEx) Answer $131,179 $420,575 -$1,991 $64,512 $861,840 4 points Question 23 [Q #23 ] Without considering any principal payments or capital expenditures, what is the cash flow for the seller in the year of the sale? Answer $64,512 $364,000 $187,000 -$2,457 Cannot determine from the information; but seller was not profitable and that is why he is selling. 4 points Question 24 [Q # 21] What is the net income for year 1? Answer $117,592 $330,217 -$1,991 $64,675 4 points Question 25 [Q #20 ] What is the principal portion of your debt payment in year 8? Answer $330,750 $212,625 $0 $512,750 4 points Question 26 [Q # 26 ] Considering the "math answer only", do we make the acquisition? Answer no maybe yes Bottom of Form,Did you receive my previous reply?

Paper#1865 | Written in 18-Jul-2015

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