Option D

Option B
Year Dodger Corp Returns Deviations Squared Deviations S&P 500 Returns Deviations
2009 -10.00% -16.17% 2.61% 0.00% -3.25%
2010 -5.00% -11.17% 1.25% -3.00% -6.25%
2011 12.57% 6.40% 0.41% 10.00% 6.75%
2012 24.52% 18.35% 3.37% 2.00% -1.25%
2013 -1.02% -7.19% 0.52% -2.00% -5.25%
2014 15.94% 9.77% 0.95% 12.51% 9.26%

E(r_i) E(rm)
6.17% 3.25%

Var(r_i) Var(rm)
1.822138567% 0.42%

Beta
1.29

Weight
Systematic Risk 0.70% 38.33%
Non-systematic 1.123699051% 61.67%
Squared Deviations Product of Deviations
0.11% 0.53%
0.39% 0.70%
0.46% 0.43%
0.02% -0.23%
0.28% 0.38%
0.86% 0.90%

Cov(r_i,rm)
0.54%
Option A
E(R) 17.31%
Beta 1.29
R_f 7%
RP 8%
Option B
Division Beta Market Value Weight
Personal Computers 1.6 100 0.2
Software 2 150 0.3
Computer Mainframes 1.2 250 0.5

Weighted Beta 1.52

Option C
Division Beta Market Value Weight
Personal Computers 1.6 100 0.285714286
Software 2 0 0
Computer Mainframes 1.2 250 0.714285714

Beta 1.314285714
Option D
Division Beta Market Value Weight
Personal Computers 1.6 100 0.2
Software 0 150 0.3
Computer Mainframes 1.2 250 0.5

Beta 0.92
Option D
Option B
Nr of shares (billions) 1.13 Risk-free rate 6.25%
Price per share 32.00 Beta 1.1
Market Value of Debt (billions) 2 Risk Premium 5.50%
Beta 1.1 Return on Equity 12.30%
Interest expenses last year 160 million
Income taxes 35% Risk-free rate 6.25%
rf 6.25% Default risk premium 0.20%
AAA bonds 0.20% above tbills Cost of debt 6.45%
Risk premium 5.50%
Market Value of Equity 36.16
Market Value of Debt 2
Tax Rate 35%
WACC 11.88%
Option D
 Year 0 Years 1-10 Marginal Tax Rate 40%
Revenues 250000 Discount Rate 15%
Instructors 72000
Rent 48000
EBITDA 130000 NPV 351,501.49 €
Depreciation 5000
EBIT 125000
Taxes 50000
NOPAT 75000
Depreciation 5000
OCF 80000
CAPEX -50000
FCF -50000 80000
Option D
Price/Unit 300 Year 0 Year 1
Sales/Unit 3000 Revenues 900000
Years 5 Raw Costs 300000
Raw Costs/Unit 100 Labor and Energy Costs 100000
Labor+Energy/year 100000 EBITDA 500000
CAPEX 800000 Depreciation 160000
Resale 50000 EBIT 340000
Depreciation 160000 Taxes 102000
Taxes on Capital Gains 225000 Net Income 238000
Accounts Receivables - Accounts Payables 15000 Depreciation 160000
Beta 1 OCF 398000
Risk-free rate 2% CAPEX 800000
Market Risk Premium 6% NWC 15000
Corporate Taxes 30% Change in NWC 15000
Shares 50000 Resale
Share Price 100 FCF -800000 383000

Discount Rate 8% NPV 808,482.66 €

NPV/share 16.17 €
Year 2 Year 3 Year 4 Year 5 Year 6
900000 900000 900000 900000
300000 300000 300000 300000
100000 100000 100000 100000
500000 500000 500000 500000
160000 160000 160000 160000
340000 340000 340000 340000
102000 102000 102000 102000
238000 238000 238000 238000
160000 160000 160000 160000
398000 398000 398000 398000

15000 15000 15000 15000

0 0 0 0 -15000
35000
398000 398000 398000 433000 15000