I compute the effects of a buyback on firm value, equity value, enterprise value and value per share in the

'VALUE
Cell Protocol Input cell. Please enter this number.
Computed cell: Please don't override this numbe
Your inputs
Pre-buyback details
Current Stock price = $60.00
# Shares outstanding before buyback = 2000.00
Beta for the stock = 1.20

Debt outstanding = $15,961.00 All interest bearing debt, in market value (if you h
Cash and marketable securities = $3,931.00
Cost of debt = 3.75%
Net Income $4,000.00
Interest income from cash $60.00

Do you have a fair value estimate for your stock = Yes

If yes, enter that number $75.00
Buyback information
Expected buyback price = $65.00
Number of shares bought back = 200.00
Funded with cash = $3,000.00
Funded with new debt = $10,000.00
Cost of new debt = 4.25%

Risk free Rate = 2.75%

Equity Risk Premium = 5.00%
Marginal tax rate = 40.00%

Value Impact
Pre-buyback Post-buyback
Beta 1.20 1.27
Debt to Equity Ratio 13.30% 24.26%
Debt to Capital Ratio 11.74% 19.53%
Cost of equity 8.75% 9.12%
After-tax cost of debt 2.25% 2.55%
Cost of capital 7.99% 7.83%
Enterprise value $132,030.00 $136,014.23
Firm value $135,961.00 $136,945.23
Debt outstanding $15,961.00 $25,961.00
Equity value $120,000.00 $110,984.23
Number of shares 2000.00 1800.00
Price/share $60.00 $61.66
Value Transfer
Value per share pre-buyback (if available) = $75.00
Price on buyback = $65.00
Number of shares bought back = 200.00
Value transfer to remaining shareholders = $2,000.00
Remaining shares = 1800.00
Value transfer per remaining share = $1.11
Price per share with value transfer = $62.77
e and value per share in the 'VALUE EFFECTS' worksheet & the effects on EPS/PE ratio in the 'EPS EFFECTS' worksheet.
ase enter this number.
l: Please don't override this number

aring debt, in market value (if you have it). If not, book value

% Change

3.02%
0.72%
62.65%
-7.51%
-10.00%
2.76%
PS EFFECTS' worksheet.
Pre-buyback numbers
Price per share $60.00
Market capitalization $120,000.00
Cash balance $3,931.00
Interest income from cash $60.00 If you don't have this, enter 0, since cash has been e
Net Income $4,000.00
Number of shares 2000.00

Buyback details
Number of shares bought back 200.00
Price per share for buyback $65
Post-buyback price per share $61.66
Total cost of buyback $13,000
Funded with
Cash $3,000.00
Debt $10,000.00
If funded with debt, interest rate on debt 4%
Tax rate 40%

Pre-buyback Post-buyback % Change

Market capitalization $120,000.00 $110,984.23 -7.51%
Price per share $60.00 $61.66 2.76%
Net Income $4,000.00 $3,685.00 -7.88%
Earnings per share $2.00 $2.05 2.36%
PE ratio 30.00 30.12 0.39%
s, enter 0, since cash has been earning such a low rate.

$ Change
-$9,015.77
$1.66
-$315.00
$0.05
Yes
No