FIN310 Module 3 Excel Assignment

Stock Valuation
Problems 1, 3, 5, 7, 8, & 10
Input boxes in tan

Output boxes in yellow
Given data in blue
Answers in green
NOTE: Some functions used in these spreadsheets may require that

the "Analysis ToolPak" or "Solver Add-in" be installed in Excel.
To install these, click on "Tools|Add-Ins" and select "Analysis ToolPak"
and "Solver Add-In."
sis ToolPak"
Chapter 7
Question 1
Fowler, Inc., just paid a dividend of $1.95 per share on its stock. The dividends are expected
4 percent per year, indefinitely. If investors require a return of 10.5 percent on this stock, wha
will the price be in three years? In 15 years?
Input area:
Dividend paid $ 1.95

Dividend growth rate 4.0%
Required return 10.5%
Year for price 0
Year for price 3
Year for price 15
Output area: To calculate dividends, must use FV fx for credit.

To calculate stock prices, formula entry is required
Dividend in one year

Price at Year 0
Dividend in 4 years
Price at Year 3
Dividend in 16 years
Price at Year 15
he dividends are expected to grow at a constant rate of
percent on this stock, what is the current price? What
for credit.
y is required
Chapter 7
Question 3
Stock Values The next dividend payment by Halestorm, Inc., will be $2.04 per share. The d
anticipated to maintain a growth rate of 4.5 percent forever. The stock currently sells for $37
What is the dividend yield? What is the expected capital gains yield?
Input area:

Current Stock Price $ 37.00
Output area:
Dividend yield
Capital gains yield

e $2.04 per share. The dividends are
ck currently sells for $37 per share.
Chapter 7
Question 5
Stock Valuation Tell Me Why Co. is expected to maintain a constant 3.9 percent growth ra
indefinitely. If the company has a dividend yield of 5.9 percent, what is the required return on
Input area:

Dividend yield 5.9%
Output area:
Required return
stant 3.9 percent growth rate in its dividends,
at is the required return on the company’s stock?
Chapter 7
Question 7
Stock Valuation Estes Park Corp. pays a constant $7.80 dividend on its stock. The compan
for the next 13 years and will then cease paying dividends forever. If the required return on th
is the current share price?
Input area:
Current dividend $ 7.80

Years until dividend ceases 13
Required return 11.2%
Output area:
Share price
d on its stock. The company will maintain this dividend
If the required return on this stock is 11.2 percent, what
Chapter 7
Question 8
Valuing Preferred Stock Moraine, Inc., has an issue of preferred stock outstanding that pa
dividend every year, in perpetuity. If this issue currently sells for $85 per share, what is the re
Input area:
Current dividend $ 3.50

Share price $ 85.00
Output area:
Required return
ock outstanding that pays a $3.50
er share, what is the required return?
Chapter 7
Question 10
Growth Rates The stock price of Alps Co. is $53.80. Investors require a return of 12 percen
on similar stocks. If the company plans to pay a dividend of $3.55 next year, what growth rate
is expected for the company’s stock price?
Input area:
Stock price $ 53.80

Required return 12%
Output area:
g
equire a return of 12 percent
next year, what growth rate
Investment Analysis Measures
Bullock Gold Mining
Ross, S. A., Westerfield, R. W., & Jordan, B. D. (2020). Essentials of Corporate Finance (10th ed.), pg. 274. McGraw Hill LLC.
Input area:
Year Cash flow

0 $ (625,000,000) <--Listed negative because its an outflow of cash
1 $ 70,000,000
2 $ 129,000,000
3 $ 183,000,000
4 $ 235,000,000
5 $ 210,000,000
6 $ 164,000,000
7 $ 108,000,000
8 $ 86,000,000
9 $ (90,000,000) <---Listed as negative because investment lost revenue
Required return 12%
Payback Period Input area:
Year Cash Flow Balance remaining

0 $ (625,000,000)
1 $ 70,000,000
2 $ 129,000,000
3 $ 183,000,000
4 $ 235,000,000
5 $ 210,000,000
6 $ 164,000,000
7 $ 108,000,000
8 $ 86,000,000
9 $ (90,000,000)
Output area:
Payback period <--Complete Payback Input Chart and enter answer here
IRR <--Use IRR fx for credit consideration.
PV of future cash flows <--Use NPV fx for credit consideration.
Profitability index
NPV of Project
Based upon your calculations from the previous question, explain in detail (complete
sentences) whether or not Bullock Gold Mining company should open the mine, and
why.
Reference:
Ross, S. A., Westerfield, R. W., & Jordan, B. D. (2020). Essentials of Corporate Finance (10th ed.), pg. 274. McGraw Hill LLC.
PI = PV of future cash flows (CF1-infinite)/Initial Investment Cost
Hint: Remember to only use Cash Flows 1-9 in NPV fx
NPV of project = PV of future cash flows (CF1-infinite) - Initial Investment Costs
Project Evaluation
Problems 14 & 16
Input boxes in tan

Output boxes in yellow
Given data in blue
Answers in green
NOTE: Some functions used in these spreadsheets may require that

the "Analysis ToolPak" or "Solver Add-in" be installed in Excel.
To install these, click on "Tools|Add-Ins" and select "Analysis ToolPak"
and "Solver Add-In."
ation
sis ToolPak"
Chapter 9
Question 14
Project Evaluation Kolby’s Korndogs is looking at a new sausage system with an installed co
$740,000. This cost will be depreciated straight-line to zero over the project’s seven-year life,
of which the sausage system can be scrapped for $102,000. The sausage system will save th
$217,000 per year in pretax operating costs, and the system requires an initial investment in n
capital of $69,000. What is the aftertax salvage value of the equipment? What is the annual o
cash flow? If the tax rate is 22 percent and the discount rate is 9 percent, what is the NPV of t
Installation cost $ 740,000

*Depreciation straight-line
over life 7
Pretax salvage value $ 102,000
Operating cost per year $ 217,000
Initial NWC $ 69,000
Tax rate 22%
Discount rate 9%
Output area:
Annual depreciation charge <--Answer needed here

Aftertax salvage value <--Answer needed here
OCF <--Answer needed here
Year Cash flow

0 <---Data needed here
NPV <---Must use NPV fx for credit consi
ystem with an installed cost of
project’s seven-year life, at the end
usage system will save the firm
s an initial investment in net working
ent? What is the annual operating
cent, what is the NPV of this project?
er needed here
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needed here
needed here
needed here
needed here
needed here
needed here
needed here
needed here
use NPV fx for credit consideration here
Chapter 9
Question 16
Project Evaluation Your firm is contemplating the purchase of a new $440,000 computer-b
system. The system will be depreciated straight-line to zero over its 6-year life. It will be worth
end of that time. You will save $161,000 before taxes per year in order processing costs, and
to reduce working capital by $44,000 at the beginning of the project. Working capital will reve
at the end of the project. The tax rate is 24 percent. What is the aftertax salvage value of the
What is the annual operating cash flow? What is the IRR for this project?
Input area:
Initial investment $ 440,000

*Depreciation straight-line
over life 6
Pretax salvage value $ 57,000
Cost savings per year $ 161,000
Working capital reduction $ (44,000)
Tax rate 24%
Output area:
Annual depreciation charge <--Answer needed here

Aftertax salvage value <--Answer needed here
OCF <--Answer needed here
Year Cash flow

0 <--Answer needed here
IRR <---Must use IRR fx for credit consideratio
c
of a new $440,000 computer-based order entry
er its 6-year life. It will be worth $57,000 at the
in order processing costs, and you will be able
oject. Working capital will revert back to normal
e aftertax salvage value of the equipment?
s project?
er needed here
er needed here
er needed here
er needed here
er needed here
er needed here
er needed here
er needed here
er needed here
er needed here
use IRR fx for credit consideration here

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Stock Valuation

Input boxes in tan

NOTE: Some functions used in these spreadsheets may require that

Dividend paid $ 1.95

Output area: To calculate dividends, must use FV fx for credit.

Dividend in one year

Dividend paid $ 2.04

Capital gains yield

Dividend growth rate 3.9%

Current dividend $ 7.80

Current dividend $ 3.50

Stock price $ 53.80

Year Cash flow

Required return 12%

Payback Period Input area:

Year Cash Flow Balance remaining

IRR <--Use IRR fx for credit consideration.

PV of future cash flows <--Use NPV fx for credit consideration.

Input boxes in tan

NOTE: Some functions used in these spreadsheets may require that

Installation cost $ 740,000

Annual depreciation charge <--Answer needed here

Year Cash flow

Initial investment $ 440,000

Annual depreciation charge <--Answer needed here

Year Cash flow

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