1) Yancey Industries’ Free Cash Flow for past 12 months is= $2.0 Million, and future expected growth rate of this FCF is= 6.5%. Yancey has no debt in its present capital structure. Its Cost of Equity is= 11.5%. Its tax rate is= 35%. Compute Unlevered Value of Yancey (Vu).
Compute VL and rsL for scenario whereby Yancey uses $8.0 Million Debt costing 8%.
Using Unlevered Value from above, compute VL and rsL by using M&M Model (with taxes) for Yancey by using $8.0 Million Debt costing 8%.
2) You have contracted to purchase the house for= $275,000, paying $27,500 down and taking out fully amortizing loan for balance, at 4.5% interest rate, compounded monthly for fifteen years. What will your monthly payment be if you make equal monthly instalments over next 15 years (to nearest dollar)?