Group n

1) Ahmed
2) Ahmed Mo
3) Mubarak ab
4) Amina Moha
5) Amal osma
6) Sabiriin abdu
7) Xafsa Moh
Course: Corpo
Date: 5/

THE SALES PER YEAR

SALES year 1 year 2
contrac 41,000,000 41,000,000
stop 9,120,000 13,680,000
TOTAL $ 50,120,000.00 $ 54,680,000.00

YEARS YEAR 0 YEAR 1

Equipment -85,000,000
Contract Revene 41,000,000
stop market 9,120,000
TOTAL SALES $ 50,120,000.00
Less:- Cost
Variable Cost $ 19,220,000.00
Fixed Cost $ 4,100,000.00
Depreciation $ 12,146,500.00
Income before tax $ 14,653,500.00
Taxation $ 5,568,330.00
Income after tax $ 9,085,170.00
Add:- Depreciation $ 12,146,500.00
Operating Cashflow $ 21,231,670.00
Working Capital $ (2,506,000.00) $ (228,000.00)
Reclamation cost
Tax saving on Charity
TOTAL CF $ (87,506,000.00) $ 21,003,670.00

year 1 year 2
BEG. NWC $ 2,506,000.00 $ 2,734,000.00
END NWC $ 2,734,000.00 $ 2,924,000.00
NWC CF $ (228,000.00) $ (190,000.00)

TIME CASH FLOW

0 $ (87,506,000.00)
1 $ 21,003,670.00
2 $ 26,010,270.00
3 $ 26,181,270.00
4 $ 17,984,270.00
5 $ (2,115,610.00)
6 $ 2,090,000.00
7 $ 12,296,610.00
8 $ 6,141,420.00

CASE 3
 ANSERS O
Golf Computers, Inc. (GCI) estimated
 ANSERS O
Golf Computers, Inc. (GCI) estimated
1.(a) Capital budgeting - refers to the process of determining whether available long term ventures are

(b)The following information was obt

2nd May 2012(millions) _ 3rd Fe
Book value of total deb
Book value for equity
Dell total long term debt
Source: (United St
2. (i) Estimating Dell cost of equity fr
(a)What is

(b) What is the M

(c)How man
Nu

(E) What i

(F) Using a 7% market risk pre

(a)Find the
Competit
Samsung Elec
Samsung Elec
Sony Corpor
Toshiba Corp (675
International busi
Apple Inc. (A
Acer Incorpor
EMC C
Hewlett-Packa
Lenovo Group
Total beta for d
(b)Find the beta for each of
Industrials average beta (β) =beta for all competitors + Beta for Dell =
(c)Using the

(d) Does it matter if you us

Industrial beta is lower than beta for Dell with a difference of 0.2391. It can be scrutinized that D
4. From cxa.marketwatch.com
(a) Find the y
Dell Bonds
Treasury
Corporate
Municipal
(b) What is the weighted average cost of de
The Book value weight was 2.94%
(c) Does it make a difference in thi
There is only a slight difference that can be

5. Using
(a) Calculate the weighted average cost of capital for Dell using bo
Weighted average c
 (b) What is the weighted average cost of de
The Book value weight was 2.94%
(c) Does it make a difference in thi
There is only a slight difference that can be

5. Using
(a) Calculate the weighted average cost of capital for Dell using bo
Weighted average c

Ke=
D=de
E=equ
V=total value of debt and eq
Therefore, WACC=0.03($1,624,650,000÷$23,352,650,0
=0

(b) Which c
The value of market cost of capital is more relevant than the book
6. What are some of the potential problems of using Dell as a repres
The basic potential problem is that the two companies operate differently whereby, Dell operate throug
stocks in the stock market unlike GCI (Yahoo Finance, 2012). I would therefore, suggests GCI Compan
 Group names: 3
1) Ahmed Cilmi Cali
2) Ahmed Mohamed yusuf
3) Mubarak abshir abdulaahi
4) Amina Mohamed mohamud
5) Amal osman abdulqadir
6) Sabiriin abdulkariim Hassan
7) Xafsa Mohamed dahir
Course: Corporate Finance
Date: 5/5/2020

PER YEAR INITIAL NET WARKING CAPITAL IS : $ 2,050,000

year 3 year 4 THE CASH FLOW TODAY
41,000,000 41,000,000 EQIPMANT -85,000,000
17,480,000 540,000 LAND -5,500,000
$ 58,480,000.00 $ 41,540,000.00 NWC -2,506,000
TOTAL $ (93,006,000.0)

YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6

41,000,000 41,000,000 41,000,000

13,680,000 17,480,000 540,000
$ 54,680,000.00 $ 58,480,000.00 $ 41,540,000.00

$ 21,080,000.00 $ 22,630,000.00 $ 18,290,000.00

$ 4,100,000.00 $ 4,100,000.00 $ 4,100,000.00 $ 2,700,000.00 $ 6,000,000.0
$ 20,816,500.00 $ 14,866,500.00 $ 10,616,500.00 $ 7,590,500.00 $ 7,582,000.00
$ 8,683,500.00 $ 16,883,500.00 $ 8,533,500.00 $ (7,590,500.00) $ (7,582,000.00)
$ 3,299,730.00 $ 6,415,730.00 $ 3,242,730.00 $ (2,884,390.00) $ 2,881,160.00
$ 5,383,770.00 $ 10,467,770.00 $ 5,290,770.00 $ (4,706,110.00) $ 4,700,840.00
$ 20,816,500.00 $ 14,866,500.00 $ 10,616,500.00 $ 7,590,500.00 $ 7,582,000.00
$ 26,200,270.00 $ 25,334,270.00 $ 15,907,270.00 $ 2,884,390.00 $ 12,282,840.00
$ (190,000.00) $ 847,000.00 $ 2,077,000.00
$ (5,000,000.00)
$ 2,090,000.00
$ 26,010,270.00 $ 26,181,270.00 $ 17,984,270.00 $ (2,115,610.00) $ 2,090,000.00

year 3 year 4 BOOK VALUE OF EQUIPMENT= 85,000,000-12,155,000-2

$ 2,924,000.00 $ 2,077,000.00 AFTERTAX SALVE VALUE = 51,000,000-(0.38*(51,000,000
$ 2,077,000.00 $ -
$ 847,000.00 $ 2,077,000.00

CCF
NPV $ 22,085,900.00 $ (87,506,000.00)
IRR 7.425% $ (66,502,330.00)
PORTPHOLIA INDEX 1.2524 $ (40,492,060.00)
PAYBACK PREIOD -89.570380130013 year $ (14,310,790.00)
$ 3,673,480.00

this project is acceptle to open

CASE 3
S : $ 2,050,000

YEAR 7 YEAR 8
$ 41,697,000.00

$ 7,590,500.00 $ 3,791,000.00
$ (7,590,500.00) $ (3,791,000.00)
$ 2,884,390.00 $ 1,440,580.0
$ 4,706,110.00 $ 2,350,420.00
$ 7,590,500.00 $ 3,791,000.00
$ 12,296,610.00 $ 6,141,420.00
 $ 12,296,610.00 $ 6,141,420.00

85,000,000-12,155,000-20,825,000-14,875,000-10,625,000= 26,520,000
000,000-(0.38*(51,000,000-26,520,000) = 41,697,000

-0.89570380130013