You have the opportunity to invest in a project that requires an initial investment of EUR and produces the following risky cash flows depending on the state of the economy. The project requires regular maintenance cost of . The risk-free interest rate is % and given the risk of the project, you demand a risk premium of %. What is the NPV of the project? (rounded to two decimal places)

You work for a global marketing firm who considers aquiring a company named Webcrawler specialized in SEO (Search Engine Optimization). Before making an offer you are asked to conduct a due diligence.

You expect that Webcrawler will generate free cash flows of over the next years. The company is assumed to have constant cash flows afterwards. The weighted average cost of capital for Webcrawler are %.

What is the estimated current value of Webcrawler?

You are asked to compute the free cash flows for a project with a duration of 4 years. You receive the following relevant selected information:

In addition you know that % of sales and costs of goods sold are entering and exiting working capital every period.

What is the free cash flow over the whole duration of the project? (rounded to two decimal places)

You are interested in buying shares of the company Pineapple Inc. The company has announced that it will pay a dividend of EUR over the next years. The share price is expected to be EUR at the end of the years .

What price would you be willing to pay today for the stock, if the equity cost of capital is %.

In December 2019 Rubber Inc. had a share price of 165.68 and 308346 shares outstanding. The market-to-book ratio was 6.3 and the book debt-equity ratio was 2.5. 

What is the amount of interest the company had to pay in 2019, when the interest rate is 3.12%?

Hint: work in your calculations with precise numbers (no rounding) and round only the end result to two decimal places.

You are working for a shipping company and consider buying a new truck. The price of the truck is EUR 44,000. Maintenance cost are EUR 739 per year. Annual Fuel cost are estimated to be EUR 1,532 and the insurance premium for the truck will be EUR 134 per year. The truck is going to be used for the next 5 years. You are unsure about the revenue prospects and have identified two scenarios.

The chance for the good scenario to realize is 50%. What are the expected cash flows of the truck over the next 5 years?

Assume a bond promises a risk-free payment of EUR 1000 in one year. The risk free interest rate is 4 % The bond currently trades at 916.15. 

(1) What is the arbitrage free price of the bond? 

(2) What is the arbitrage profit?

You are an investor of Pepper Corp who recently released their annual report. From the income statement you can see that the company has achieved a net income of EUR 4.46 million. The book value of equity is EUR 24.52 million. The company’s Debt-Equity Ratio is 0.45. The current interest rate for debt payments is 4.00%. 

Compute both the ROA (Return on Asset) and ROE (Return on Equity) and express them in Percentages.

Hint: work in your calculations with precise numbers (no rounding) and round only the end result to two decimal places.

In October 2018 Cinnamon Co. had a share price of EUR , million shares outstanding, a market-to-book ratio of , a book debt-equity ratio of and cash of EUR million. What was Cinnamon’s market capitalization? What was its enterprise value? (in million)

Assume a security promises in one year a risk-free payment of EUR . If the risk-free interest rate is %, what would be the fair price of the bond today? If the actual price of the bond is EUR today, how can you exploit this arbitrage opportunity and what is the arbitrage profit you can realize today?