1 / 3

Bow Tie Company

Bow Tie Company. BTC. Project. EBIT €20m # shares 200,000 Tax Rate 40% Beta 1.20. Cost €40m ∆ EBIT €10m. Riskfree rate: 5% Market risk premium: 6%. BTC EBIT (1- T C ) 12m r A (= 5+6*1.2) 12.20% V U 98.36m. Project Base-case NPV ∆ EBIT(1-T C ) 6m

redford
Download Presentation

Bow Tie Company

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Bow Tie Company BTC Project EBIT €20m # shares 200,000 Tax Rate 40% Beta 1.20 Cost €40m ∆EBIT €10m Riskfree rate: 5% Market risk premium: 6%

  2. BTC EBIT(1-TC) 12m rA(= 5+6*1.2) 12.20% VU 98.36m Project Base-case NPV ∆EBIT(1-TC) 6m NPV= -40+6/0.12 9.18m Valuing the company and the project BTC with project – all-equityValue of Assets 147.54m Equity 147.54(= 98.36 + 9.18 + 40)Expected return on equity rA = 12.20% BTC with project – Debt =40APV = Base-case NPV + TCD = 9.18 + 16 = 25.18Value of Assets 147.54m Equity 123.54PV(Tax Shield) 16 Debt 40Value of company 163.54m 163.54 Expected return on equity rE = 13.20% L=D/V = 24.46%WACC = 11.01%

More Related