Tianjin Plastics
Autor: Maryam • November 3, 2018 • 3,124 Words (13 Pages) • 540 Views
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For the post-completion phase the WACCs used in order to calculate the NPV of the Free Cash Flows (FCFs) are also different in some periods, because of different maturities and interest rates for the loans. We assumed the cost of equity to be 18% , based on the analysts’ estimates.
Post-completion financing 2000 -2006
Dollars:
Renminbi
Exchange rate:
Cost of debt:
Cost of debt:
Bank of China (12Y due):
$10.900.000,00
$90.700.000,00
8,321100917
13%
$1.417.000,00
Syndication loan - first tranche (6Y due)
$33.000.000,00
$274.596.330,28
6,70%
$2.211.000,00
Syndication loan - second tranche (10 y due)
$57.000.000,00
$474.302.752,29
7,50%
$4.275.000,00
Total debt financing:
$100.900.000,00
$839.599.082,57
7,83%
$7.903.000,00
Based on the above inputs and the maturities and annual installments we calculated the different WACCs in the different years up until the 1st of July 2020. This led to the following WACCs:
WACC calculations Years 2000 - 2005
2000
2001
2002
2003
2004
2005
2006
Cost of equity (assumption)
18%
18%
18%
18%
18%
18%
18%
Cost of debt
7,83%
7,83%
7,83%
7,83%
7,83%
7,83%
7,83%
Equity (in Millions of $)
$16,50
$16,50
$16,50
$16,50
$16,50
$16,50
$16,50
Debt (in Millions of $)
$100,90
$88,79
$76,68
$64,58
$52,47
$40,36
$28,25
Debt + Equity (in Millions of $)
$117,40
$105,29
$93,18
$81,08
$68,97
$56,86
$44,75
Corporate tax rate
40%
40%
40%
40%
40%
40%
40%
WACC without tax shield (y1 - 6)=
0,092593441
0,094237159
0,096308049
0,098997502
0,102631319
0,107812824
0,115798324
And for the years after 2006 the debt level changed in a less rapid way (the first tranche loan was due in 6 years) giving the following WACCS:
WACC calculations Years 2006 - 2009
WACC calculations Years 2010 & 2011
2007
2008
2009
2010
2011
2012
18%
18%
18%
18%
18%
18%
8,56%
8,56%
8,56%
8,56%
13%
13%
$16,50
$16,50
$16,50
$16,50
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