An existing highprofits company is considering a new expansion project. The required initial investment will be
million in Y Two other investments million euro each have been planned in the th and the th year of
management. All investments will be amortized over years of management. At the end of the th year of management
of the investment will be sold at a price of million. Half of the investment in zero will be financed by equity and
the other half by two loans of the same amount: one with an interest rate of and reimbursed in the years of
management, the other with an interest rate of and constant forever. The investment will generate an EBITDA of
million annually for the next years of management. Moreover, because to the new investment, the EBITDA of the
company will decrease from to million. In the th year of management the FCFO will be million, declining to
infinite every year. Tax rate is With a cost of capital of estimate FCFOs, FCFEs, the present value of the
tax shields, APV and ADSCR.
