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- 2011-7-11
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- 2014-8-2
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2#
发表于 2011-7-11 19:19
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cgeorgan,
A bit tricky, but: the text notes that the company is borrowing 50% of the beginning market value of the company (project , but in this case Granite is purely the five year project). The beginning market value is the present value of future cash flows (ignores the initial capital outlay).
Since the beginning MV is 219,492, the company borrows 109,746.
Now the tricky part:
a) the text also says the company will *maintain* the 50% ratio.
b) the company is winding down in five years so is distributing all cash flows to bond and equity holders
The beginning MV at the start of year two is the same as the ending MV for year one = 196,441.
212,492 - 196,441 = 23,051. In other words, the value of the company (project) declined 23,051. To maintain the 50% debt/value ratio, the company needs to pay back half that amount to bond holders. Half of 23,051 = 11,525.
Since total operating cash flow from year one was 39,513, and we paid 11,525 to bond holders, (39,513 - 11,525) = 27,988 is paid as dividends to equity holders. (Figures have been rounded, so might not add up exactly).
Hope this helps,
BES
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