2-5 APV Solution V2

.xlsx

School

Michigan State University *

*We aren’t endorsed by this school

Course

355

Subject

Accounting

Date

Feb 20, 2024

Type

xlsx

Pages

17

Uploaded by KidFogOyster36

Report
A11Y - This workbook contains 3 sheets. This first sheet is the Index. The second sheet contains a suggest DCF (APV) CapEx & Dep Financing
ted solution to the WACC model. The third sheet contains a suggested solution to the Capital Expenditure
and Depreciation models. Hyperlinks to the other 2 sheets can be found below.
Table 1 - Time line 2/17/2024 12/31/2023 Fixed cost (annual) Occupancy % Room rate (per room per day) $ 700 Number of rooms 250 Operational Days 365 Variable Cost (as % of same year revenue) 15% ONWC (as % of next year's revenue) 20% Tax Rate 35% WACC 25% Cost of Equity 10% Table 2 - Time line 2/17/2024 12/31/2023 Revenue from room Variable costs Fixed costs Depreciation EBIT Taxes Net operating Income Depreciation Capital Expenditure $ (20,000,000) ONWC Change in ONWC FCF $ - $ (20,000,000) XNPV of Operating $ 80,057,226 Option A XNPV of Financing $ 1,288,386 APV $ 81,345,612 Option B XNPV of Financing $ 25,083,711 APV $ 105,140,937 A11Y - This worksheet contains two populated regions named “Value Drivers: Operations” and “ Back to Index Value drivers: Operations - This re Model: Unlevered Operating FCFs - This region cont
APV using Option B is more profitable. Our analysis suggests that Option B is a better fin
12/31/2024 12/31/2025 12/31/2026 12/31/2027 $ 2,000,000 $ 2,000,000 $ 2,000,000 50% 50% 50% 12/31/2024 12/31/2025 12/31/2026 12/31/2027 $ 31,937,500 $ 31,937,500 $ 31,937,500 $ 4,790,625 $ 4,790,625 $ 4,790,625 $ 2,000,000 $ 2,000,000 $ 2,000,000 $ 1,500,000 $ 1,500,000 $ 1,500,000 $ 23,646,875 $ 23,646,875 $ 23,646,875 $ 8,276,406 $ 8,276,406 $ 8,276,406 $ 15,370,469 $ 15,370,469 $ 15,370,469 $ 1,500,000 $ 1,500,000 $ 1,500,000 $ (10,000,000) $ - $ - $ - $ 6,387,500 $ 6,387,500 $ 6,387,500 $ 6,387,500 $ 6,387,500 $ - $ - $ - $ (16,387,500) $ 16,870,469 $ 16,870,469 $ 16,870,469 “Model: Unlevered Operating FCFs”. Each region’s title contains additional description.
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