Dfl and dtl bug ltd currently has issue bonds
Mt Helen
This exam represents 20 percent of the marks for this unit. It is to be completed in groups of up to 3 persons.
Efficient use of the spreadsheet functions and facilities: formulas, cell names, documentation, all variables in “input” section, etc.
Question 1.
Bug Ltd is considering purchasing a new widget making machine which will cost $10,000,000.
Bug Ltd has the following options to finance the purchase.
Given an EBIT of $2,500,000, calculate the EPS of the options.
Calculate the EBIT indifference point for the options.
At this growth rate what is the addition to retained earnings?
To maintain the current debt/equity ratio how much debt and how much equity is required?
What would happen if the growth rate was zero? How do you interpret this?
Question 4.
| Cash Price per Unit | $ 50.00 | |||
|---|---|---|---|---|
| Variable Cost per Unit | $ 40.00 | |||
| Current Quantity Sold per Month | 1000 | |||
| Quantity Sold under New Policy | 1150 | |||
| Monthly Required Return | 2.00% | |||
| Terms | 30 days | |||
Calculate the NPV associated with a One-Time Sale.
Calculate the NPV associated with a repeat sale.
Calculate the NPV of the acquisition
Calculate the value of the combined companies
Calculate the NPV of the takeover
Calculate the gain or loss to A Ltds shareholders