Superb Professors

Please complete the exercises in Word or Excel
1/Boomwichers NV, a Dutch company financed by shareholders’ equity only, decides, during
the course of year n, to finance an investment project worth €200m using shareholders’
equity (50%) and debt (50%). The loan it takes out (€100m) will be paid off in full in
n+5, and the company will pay 5% interest per year over the period. At the end of the
period, you are asked to complete the following simplified table (no further investments
are to be made):
Period n n+1 n+2 n+3 n+4 n+5
Operating inflows 165 200 240 280 320 360
Operating outflows 165 175 180 185 180 190
Operating cash flows
Investments −200
Free cash flows
Flows . . .
. . . to creditors
. . . to shareholders
What do you conclude from the above?
 
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