Project b

Past Security Returns

Year Month S&P 500 Sierra T d/e
2003 Jan 0.0015 -0.0180

Feb 0.0539 0.1054 Beta Calculations

Mar -0.0027 0.0413 b L Levered Beta x

Apr 0.0697 0.0845 Average (1 + d/e(1-T)) x

May 0.0133 0.0352

Jun 0.0402 0.0328 b U Unlevered Beta x

Jul -0.0012 -0.0909

Aug 0.0194 0.1021 The Equity Premium x

Sep -0.0037 0.0342

Oct 0.0234 -0.0041 Project Cost of Capital

Nov 0.0709 -0.0078 Component Choice

Dec -0.0293 -0.0036 rf risk free rate x

2004 Jan 0.0204 0.0695 rp risk premium x

Feb 0.0495 0.1227 rliq liquidity premium x

Mar 0.0348 0.0654

Apr 0.0401 0.0727 Project r #VALUE!

May 0.0413 -0.0099

Jun -0.0336 -0.0074

Jul 0.0089 0.0287

Aug 0.0031 -0.0023

Sep 0.0427 0.1184

Oct -0.0059 0.0346

Nov -0.0390 -0.0690

Dec 0.0394 0.0328

2005 Jan 0.0257 0.0332

Feb -0.0194 0.0136

Mar 0.0142 0.0294

Apr 0.0096 -0.0252

May 0.0300 -0.0361

Jun 0.0018 -0.0724

Jul 0.0088 0.0396

Aug -0.0244 -0.0470

Sep 0.0082 -0.0220

Oct 0.0095 0.0644

Nov 0.0147 -0.0291

Dec -0.0052 -0.0257

2006 Jan 0.0222 0.0114

Effective Costs
Recovery
Deprec Asset Class ED Period (SL) D DT MV5

A x 4 x x x

B x 5 x x x

C x 8 x x x

D x 10 x x x

Total 0

T x

r x
BV5 NSV5 EC

x x x

x x x

x x x

x x x

0
 all Fixed Assets at Time 1 x

ost of Expansion (new ICF) x

Percentage Boost 0.20 ← different from case booklet

Things to Note:

1 The variable expense rate per unit produced is 56% .not 46% as given in the booklet on page 35.

2 The expected boost from expansion is 20% …not the 25% value given in the booklet on page 36.

3 The "foregone benefit" of $100,000 mentioned on page 35 is already in an after-tax format

4 The impact on restaurant flows of $0.05 mentioned on page 35 is already in an after-tax format

5 Activity 12 (on page 54) mentions @Risk ….but you will not have to use this program for the case.