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Date
Apr 3, 2024
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Uploaded by UltraFalconMaster1014
EFC and Toxic Term Sheets
Cap and Payout Tables
Assumptions
Series A Invesment
$ 5,000,000 Table 1
Cap Table
Pre-Investment
Ownership
Shareholder
Shares
Percentage
Founder
800,000 80%
Management
200,000 20%
Total
1,000,000 100%
Table 2
Cap Table
Post-Common Investment
Ownership
Shareholder
Shares
Percentage
VC1
333,333 25%
Founder
800,000 60%
Management
200,000 15%
Total
1,333,333 100%
Table 3
Payout Table - All Common Stock
$10 million acquisition proceeds
Ownership
Total
Shareholder
Shares
Percentage
Payout
VC1
333,333 25%
$ 2,500,000 Founder
800,000 60%
$ 6,000,000 Management
200,000 15%
$ 1,500,000 Total
1,333,333 100%
$ 10,000,000 Table 4
Payout Table - Redeemable Preferred Stock
$10 million acquisition proceeds
Ownership
Shareholder
Security
Shares
Percentage
VC1
Preferred
333,333 100%
Total Preferreed
Founder
Common
800,000 60%
Management
Common
200,000 15%
Total
1,333,333 75%
Table 5
Payout Table - Convertible Preferred Stock
$10 million and $40 million acquisition proceeds
$10 million acquisition proceeds
Ownership
Shareholder
Security
Shares
Percentage
VC1
Preferred
333,333 25%
Founder
Common
800,000 60%
Management
Common
200,000 15%
Total
1,333,333 100%
$40 million acquisition proceeds
$ 40,000,000 Ownership
Shareholder
Security
Shares
Percentage
VC1
Preferred
333,333 25%
Founder
Common
800,000 60%
Management
Common
200,000 15%
Total
1,333,333 100%
Table 6
Payout Table - Participating Convertible Preferred
$10 million and $40 million acquisition proceeds
$10 million acquistion proceeds
$ 10,000,000 Ownership
Shareholder
Security
Shares
Percentage
VC1
Preferred
333,333 25%
Founder
Common
800,000 60%
Management
Common
200,000 15%
Total
1,333,333 100%
$40 million acquisition proceeds
$ 40,000,000 Ownership
Shareholder
Security
Shares
Percentage
VC1
Preferred
333,333 25%
Founder
Common
800,000 60%
Management
Common
200,000 15%
Total
1,333,333 100%
Net
Payout
$ (2,500,000)
$ 5,000,000 $ 1,500,000 $ 4,000,000 Total
Net
Payout
Payout
$ 5,000,000 $ - $ 5,000,000 $ - $ 4,000,000 $ 3,000,000 $ 1,000,000 $ 1,000,000 $ 10,000,000 $ 4,000,000 Total
Net
Payout
Payout
$ 5,000,000 $ - $ 4,000,000 $ 3,000,000
$ 1,000,000 $ 1,000,000 $ 10,000,000 $ 4,000,000 Total
Net
Payout
Payout
$ 10,000,000 $ 5,000,000 $ 24,000,000 $ 23,000,000 $ 6,000,000 $ 6,000,000 $ 10,000,000 $ 34,000,000 d Stock
Total
Net
Payout
Payout
Investment
$ 6,250,000 $ 1,250,000 $ 5,000,000 $ 3,000,000 $ 2,000,000 $ 750,000 $ 750,000 $ 10,000,000 $ 4,000,000 Total
Net
Payout
Payout
$ 13,750,000 $ 8,750,000 $ 5,000,000 $ 21,000,000 $ 20,000,000
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Related Questions
The company capital structure consists of debt 250000 at 0.076, preferred stock 230000 at 11% and common
stock 120000 at 14%, calculate company's weighted average cost of capital
Select one:
O a. 0.0737
O b. All the given choices are not correct
O c. 0.0316
O d. 0.0596
O e. 0.1017
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Canvas
C. compute the earnings per share for the three financing packages by completing the table below:
Financial Package
3
Operating earnings in million
- interest expense in million
- Earnings available in million
No. of Shares
Earnings per share
d. complete the table below for each of the three financing packages based on three assumptions for the return on assets
shown below;
Financial Packages
Annual (ROA)
1 least leverage
3 most leverage
15%
10%
5%
F1
DII
F2
F3
F4
prt sc
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The company capital structure consist of
debt 380000 @ 4.05%, common stock
220000@12.09% and preferred stock
400000 @ 19.50%, calculate company's
weighted average cost of capital
Select one:
O a. 12.99%
O b. 11%
O c. 9.50%
O d. None
O e. 11.99%
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Determine Garneau's optimal capital structure based on the following information:
Debt
EPS
DPS
Stock Price
20%
2.2
1.1
40.12
30%
2.4
40%
2.6
50%
2.8
Equity
80%
70%
60%
50%
O a. 20% debt; 80% equity
O b. 40% debt; 60% equity
O c. 50% debt; 50% equity
O d. 30% debt; 70% equity
1.2
1.3
1.4
41.34
40.52
39.42
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Question 1:
The company capital structure consists of debt 230000 at 6.45%, preferred stock 260000 at 15.40% and common stock 170000 at 11.33%, calculate and define the company's weighted average cost of capital
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From the following information, calculate Capital Employed Ratio:
$
14,00,000
4,00,000
Share Capital
9% Preference Shares
Reserve and Surplus
2,00,000
Surplus i.e., Balance in Statement of Profit and.Loss
10% Debentures (Long term)
1,50,000
5,00,000
Current Liabilities
3,00,000
Fixed Assets
18,00,000
Land and Buildings
10,00,000
Current Assets
6,00,000
Inventories
5,00,000
50,000
Trade Receivables
Compute Return on Capital Employed Ratio.
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P Flag question
The company capital structure
consists of debt 250000 at 0.082,
preferred stock 230000 at 11% and
common stock 120000 at 14%,
calculate company's weighted
average cost of capital
Select one:
O a. 0.0341
Ob. All the given choices are not
correct
Oc. 0.1042
Od. 0.0621
O e. 0.0762
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Percent of capital structure:
Preferred stock
Common equity (retained earnings)
Debt
Additional information:
Corporate tax rate
Dividend, preferred
15%
45
40
35%
$ 10.00
Dividend, expected common
$ 5.50
Price, preferred
$ 98.00
Growth rate
10%
Bond yield
11%
Flotation cost, preferred
$ 8.20
$ 77.00
Price, common
Calculate the weighted average cost of capital for Digital Processing Incorporated
Note: Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.
Answer is complete but not entirely correct.
Debt
Preferred stock
Common equity (retained earnings)
Weighted average cost of capital
Weighted Cost
7.15
11.14 X
%
7.86
26.15
%
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Consider the following table of Earnings Components:
Firm A
Firm B
Firm C
Reported EPS
$
12
$
15
$
18
Analyst’s EPS composition:
Permanent component (βP = 5)
80
%
60
%
75
%
Transitory component (βT = 1)
10
%
35
%
25
%
Value-irrelevant component (β0 = 0)
10
%
5
%
0
%
The implied share price of Firm C’s stock is:
Multiple Choice
$18.00
$63.00
$72.00
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Problem 5-7 (IAA)
Bronze Company provided the following information at
year-end:
Share capital
Share premium
Cumulative translation adjustment - debit
Treasury shares, at cost
Retained earnings
Cumulative unrealized gain on option contract
designated as cash flow hedge
6,000,000
3,500,000
2,000,000
700,000
1,500,000
600,000
What is the shareholders' equity at year-end?
a. 9,500,000
b. 8,900,000
c. 7,400,000
d. 7,500,000
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Percent of capital structure:
Preferred stock
Common equity (retained earnings)
Debt
Additional information:
Corporate tax rate
Dividend, preferred
Dividend, expected common
Price, preferred
Growth rate
Bond yield
Flotation cost, preferred
Price, common
15%
45
40
35%
Debt
Preferred stock
Common equity (retained earnings)
Weighted average cost of capital
$ 8.00
$ 3.50
$ 105.00
98
8%
$ 10.40
$ 78.00
Calculate the weighted average cost of capital for Digital Processing Incorporated
Note: Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.
Answer is complete but not entirely correct.
Weighted Cost
5.20 %
8.33
11.50
25.03 %
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Global Technology's capital structure is as follows:
Debt
Preferred stock
Common equity
15%
50
35
The aftertax cost of debt is 8.50 percent; the cost of preferred stock is 12.00 percent; and the cost of common equity (in the form of
retained earnings) is 15.50 percent.
Calculate the Global Technology's weighted cost of each source of capital and the weighted average cost of capital.
Note: Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.
Debt
Preferred stock
Common equity
Weighted average cost of capital
Weighted Cost
%
%
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Pompey Inc. Carries the following marketable equity
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The M. Smith and Family Corporation
Data
Shares Outstanding
25,000,000
Earnings
$50,000,000
Dividends, Per Share (Just Paid)
$1.25
Return on Equity
0.15
Beta
1.35
Market Data
Expected Return
Market Return
0.12
Risk-Free Rate
0.03
Required:
Using the information in the tables above, complete the necessary steps to calculate the P/E ratio and the PEG ratio.
The M. Smith and Family Corporation
Calculations
Capitalization Rate
Earnings Per Share
Plowback Rate
Sustainable Growth Rate
Price
P/E Ratio
Sustainable Growth Rate (as Percentage, use for PEG Calculation)
0
PEG Ratio
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please dont provide handwritten solution thank you
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Assume that Firm A is an all-equity firm with total assets of $5,000 and the following distribution of
EBIT for the coming year:
Firm A
Unlevered
Probability
EBIT
Interest
EBT
Taxes (40%)
Net Income
BEP
ROA
ROE
Bad
O 3.487%
O 2.653 %
O 3.098%
O 3.774%
O 2.800%
30.00%
$500.00
$0.00
$500.00
-$200.00
$300.00
10.00%
6.00%
6.00%
Economy
Average
50,00%
$700.00
$0.00
$700.00
-$280.00
$420.00
14.00%
8.40%
8,40%
Good
20.00%
$900.00
$0.00
$900.00
-$360.00
$540.00
18.00%
10.80%
10.80%
Now assume that the firm plans to issue $2,000 of debt, at an interest rate of 6.4 percent, and use
the proceeds to repurchase equity (you may ignore potential impacts on price and assume that the
firm will then have $3,000 of equity). Given this information, determine the standard deviation of
the new ROE distribution.
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YZ Goods target capital structure and other data follow:
Long-term debt $ 754,000,000
Preferred stock 40,000,000
Common equity 896,000,000
Total capital $1,690,000,000
Cost of Debt (kd) = 11% for amounts up to 80 M of additional Debt; will rise to 13% after that.
Cost of Preferred = 10.5% at any amount
T = 40%.
P0 = $23.
g= 8%, and it is expected to remain constant.
Assume that the company expects to have total earnings of $137.8 million in 2020. Further, it has a target payout ratio of 45 percent, so it plans to pay out 45 percent of its earnings as dividends. Flotation cost of 5% is incurred for issuance of new shares.
The following projects are available for investment:
Project Cost (in Millions) Rate of Return
A $50…
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Assume that Firm A is an all-equity firm with total assets of $5,000 and the following distribution of
EBIT for the coming year:
Fem A
Unlevered
Probability
EBIT
Interest
EBT
Taxes (40%)
Net Income
BEP
ROA
ROE
O2.653%
O 3.487%
2.800%
O 3.098%
Bad
3.774%
10.00%
$500.00
$0.00
$500.00
-$200.00
$300.00
10.00%
6.00%
6.00%
Economy
Average
40.00%
$700.00
$0.00
$700.00
-$280.00
$420.00
14.00%
8.40%
8.40%
Now assume that the firm plans to issue $2,000 of debt, at an interest rate of 6.4 percent, and use
the proceeds to repurchase equity (you may ignore potential impacts on price and assume that the
firm will then have $3.000 of equity). Given this information, determine the standard deviation of
the new ROE distribution.
Good
50.00%
$900.00
$0.00
$900.00
-$360.00
$540.00
18.00%
10.80%
10.80%
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14. Adjusted WACC. Clark Explorers, Inc., an engineering firm, has the follow-
ing capital structure:
Market price
Outstanding units
Book value
Cost of capital
a. 35%
b. 25%
Equity
$30.00
120,000
$3,000,000
15%
c. 15%
d. 5%
Preferred Stock
$110.00
10,000
$1,000,000
12%
Debt
Using market value and book value (separately, of course), find the adjusted
WACC for Clark Explorers at the following tax rates:
$955.00
6,000
$6,000,000
9%
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The company's capital structure is as follows Debt Weight 25%. Preferred Stock Weight 25%
Common equity Weight 50%. The cost of debt is 12%6, the cost of preferred stock is 15% and
the cost of common equity is 0.244 Calculate the companys weighted average Cost of
tapital.
Select one:
Oa ob920
Ob.0.1895
Oc01520
Od All the given choices are not correct
Oe 0.1595
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Please calculate investment in net working capital, net cash flows, and present value of net cash flows! Thank you!
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