finance management
shaaeh
su_mhc6305_w4_a3.xlsCapital Structure Decisions
| Capital Structure Case Study | © 2007 South University | ||||||||||||
| Medical Temps, Inc. | |||||||||||||
| Enter appropriate input values in the cells colored red. | |||||||||||||
| INPUT DATA: | KEY OUTPUT: | ||||||||||||
| ROE Analysis Input: | Impact on ROE: | ||||||||||||
| Total value | $0 | All Equity | 25% Debt | 50% Debt | 75% Debt | ||||||||
| Cost of debt | 0.0% | Expected ROE | 0.0% | 0.0% | 0.0% | 0.0% | |||||||
| EBIT | $0 | SD of ROE | 0.0% | 0.0% | 0.0% | 0.0% | |||||||
| Tax rate | 0.0% | ||||||||||||
| No. of shares | 0 | ||||||||||||
| Valuation Analysis Input: | Valuation Analysis: | ||||||||||||
| Debt Amount | Cost of Debt | Debt Amount | Stock Price | CCC | |||||||||
| $0 | 0.0% | $0 | $0.00 | 0.0% | |||||||||
| 2,500,000 | 0.0% | 2,500,000 | 0.00 | 0.0% | |||||||||
| 5,000,000 | 0.0% | 5,000,000 | 0.00 | 0.0% | |||||||||
| 7,500,000 | 0.0% | 7,500,000 | 0.00 | 0.0% | |||||||||
| 10,000,000 | 0.0% | 10,000,000 | 0.00 | 0.0% | |||||||||
| 12,500,000 | 0.0% | 12,500,000 | 0.00 | 0.0% | |||||||||
| Debt Amount | Cost of Equity | ||||||||||||
| $0 | 0.0% | ||||||||||||
| 2,500,000 | 0.0% | ||||||||||||
| 5,000,000 | 0.0% | ||||||||||||
| 7,500,000 | 0.0% | ||||||||||||
| 10,000,000 | 0.0% | ||||||||||||
| 12,500,000 | 0.0% | ||||||||||||
| MODEL-GENERATED DATA: | |||||||||||||
| ROE Analysis: | |||||||||||||
| All Equity | 25% Debt | 50% Debt | 75% Debt | ||||||||||
| Probability | 0.25 | 0.50 | 0.25 | 0.25 | 0.50 | 0.25 | 0.25 | 0.50 | 0.25 | 0.25 | 0.50 | 0.25 | |
| EBIT | $2,500,000 | $3,000,000 | $3,500,000 | $2,500,000 | $3,000,000 | $3,500,000 | $2,500,000 | $3,000,000 | $3,500,000 | $2,500,000 | $3,000,000 | $3,500,000 | |
| Interest | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| EBT | $2,500,000 | $3,000,000 | $3,500,000 | $2,500,000 | $3,000,000 | $3,500,000 | $2,500,000 | $3,000,000 | $3,500,000 | $2,500,000 | $3,000,000 | $3,500,000 | |
| Taxes | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| Net Income | $2,500,000 | $3,000,000 | $3,500,000 | $2,500,000 | $3,000,000 | $3,500,000 | $2,500,000 | $3,000,000 | $3,500,000 | $2,500,000 | $3,000,000 | $3,500,000 | |
| ROE | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | |
| TIE Ratio | n.a. | n.a. | n.a. | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| E(ROE) | 0.0% | 0.0% | 0.0% | 0.0% | |||||||||
| Std dev of ROE | 0.0% | 0.0% | 0.0% | 0.0% | |||||||||
| Coefficient of variation | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||
| Valuation Analysis: | |||||||||||||
| Market Value | Market Value | Total | Stock | Number of | Earnings per | ||||||||
| of Debt | of Equity | Value | Debt Ratio | Price | CCC | Shares | Share (EPS) | ||||||
| $0 | $0 | $0 | 0.0% | $0.000 | 0.0% | 0 | $0.00 | ||||||
| 2,500,000 | 0 | 0 | 0.0% | 0.000 | 0.0% | 0 | 0.00 | ||||||
| 5,000,000 | 0 | 0 | 0.0% | 0.000 | 0.0% | 0 | 0.00 | ||||||
| 7,500,000 | 0 | 0 | 0.0% | 0.000 | 0.0% | 0 | 0.00 | ||||||
| 10,000,000 | 0 | 0 | 0.0% | 0.000 | 0.0% | 0 | 0.00 | ||||||
| 12,500,000 | 0 | 0 | 0.0% | 0.000 | 0.0% | 0 | 0.00 | ||||||
| Optimal Debt Level = | $0 |
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