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Table 1 Profit/Loss Statement (Unit: MB)

Profit/Loss Profile	2018	2019	2020
1. Total Revenue	55,000	60,000	70,000
2. Cost of Goods Sold (-)	(39,000)	(42,000)	(48,000)
3. Gross Profit	16,000	18,000	22,000
4. Selling & Admin Costs (-)	(10,000)	(10,200)	(10,900)
5. Earning before Interest and Tax (EBIT)	6,000	7,800	11,100
6. Interest Payment (-)	(1,500)	(1,600)	(1,700)
7. Profit before Tax	4,500	6,200	9,400
8. Tax: 10% of Profit before Tax (-)	(450)	(620)	(940)
9. Net Profit	4,050	5,580	8,460

Table 2 Balance Sheet: Assets (Unit: MB)

Asset Profile	2018	2019	2020
1. Cash	3,000	3,500	4,500
2. Account Receivable	7,500	8,000	10,000
3. Inventory	14,000	14,500	16,000
4. Other Current Assets	2,000	2,700	3,200
(1) Total Current Assets	26,500	28,700	33,700
5. Equipment and Machines	17,500	18,600	19,800
6. Buildings and Premises	34,000	34,000	34,000
7. Accumulated Depreciation	(10,000)	(12,000)	(14,000)
(2) Total Fixed Assets	41,500	40,600	39,800
Total Assets = (1) + (2)	68,000	69,300	73,500

Table 2 Balance Sheet: Liabilities and Equity (Unit: MB)

After completing financial statement analysis, CEO request CFO to estimate the Company's Cost of Capital in terms of weight average cost of capital (WACC). CEO has a target capital structure that the ratio of debt, preferred stock, and common stock is 35%, 35%, and 30% respectively. In this respect, CFO asks you to calculate weighted average cost of capital (WACC). The bankers expect the Company to pay interest for 6% per year and tax rate equals 30% of taxable income. Preferred stockholders expect dividend of 7% per year. However, common shareholders request the Company to pay dividend based on CAPM approach. In turn, CFO collects market data and finds out that 5-year government bond (risk-free) yields a return of 5%, Thailand market beta is 1.2 and the firm's risk premium equals 15% (5 Marks).

In October 2020, James, the owner of venture capital, is interested in evaluating the value of the Company and will propose a strategic acquisition proposal. James's financial advisor projects the free cash flow for the future 10 years of the Company as follows: 10,000 12,500, 13,750, 14,500, 16,000, 18,000, 20,000, 22,500, 25,000, and 30,000 (i.e. FCF 1 - FCF 10). James's team adopts WACC calculated by you. What is corporate value (V_OP) of the Company? (30 Marks)

As part of the Company's 10 Year Corporate Plan (2022 - 2031), the Board of Directors has approved investment capital for building a new 1,500 megawatt power plant in Philippines in October 2020. In turn, the Board of Directors requests both financial advisors and engineers to estimate real cash flow (RCF) and, in turn, net present value (NPV). Key assumptions are displayed as follows:

Technical Assumptions:

• Electricity generating = 1,500 megawatt
• Initial capital investment (2 years) = 300 million US $ in year 0 and 300 million US $ in year 1
• Lifetime 8 Years in operation
• The firm can start selling electricity from year 2
• Operating expenses (e.g. salary, insurance, inputs) = 150 million US $/year estimated for year 0 with 2% increase every year from year 1 - 9
• Since the new project will generate electricity in year 2; hence, operating expenses will exist from year 2 9

Economic Assumptions:

• Company revenue = 1 million US $/day or 360 million US $/year estimated for year 0 with 2% increase in price every year from year 2-9 (i.e. you need to calculate NPV (with inflation)).
• Real discount rate equals 7% (k_r = 7%) and inflation (i) = 2%.
• Equal depreciation of capital investment from year 2 9.
• Tax rate = 20% of taxable income.
• Two key drivers of sales are: (1) GDP growth rate around 5 7% from years 2-9 and (2) electricity demand will be upside trend from years 2-9.

Creditworthiness Assumption:

• The Companys credit rating is excellent with low possibility of credit default.

After finishing RCF and NPV estimation, you should recommend the Board of Directors to make a decision either to carry out or not to carry out the expansion project? (30 Marks)

Profile	2018	2019	2020
Note Payable (Short-term Debt)	4,000	4,500	5,500
Account Payable	8,500	8,700	10,500
Accruals (e.g. Tax, Expense)	700	900	1,100
(3) Total Current Liabilities	13,200	14,100	17,100
Corporate Bond	7,000	7,000	7,000
Long-term Loan	16,300	15,600	14,900
(4) Total Long-term Liabilities	23,300	22,600	21,900
Common Stock	5,000	5,000	5,000
Preferred Stock	5,000	5,000	5,000
Retained Earning (Loss)	21,500	22,600	24,500
(5) Total Equity	31,500	32,600	34,500
Liabilities + Equity = (3) + (4) + (5)	68,000	69,300	73,500

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