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Instructor capstone solution — Precision Valve & Actuator

Instructor version. Grade reasoning and live formulas before comparing outputs. Do not award an 80-point pass if a critical failure remains. A decline supported by the stated economics can receive full marks.

Independently calculated checkpoints

{
  "exit_ev": 6302849.336000001,
  "proceeds": 5243726.233118029,
  "moic": 4.369771860931691,
  "irr": 0.3430486750437812,
  "thresholds": {
    "1.25": 0.057160971158013024,
    "1.15": 0.08065443549254848,
    "1.0": 0.11589463199435164
  },
  "annual": [
    {
      "year": 1,
      "ebitda": 1400000.0,
      "interest": 388956.1736688272,
      "principal": 245367.36336363008,
      "service": 634323.5370324573,
      "tax": 202760.9565827932,
      "cfads": 947239.0434172067,
      "dscr": 1.493305841761218,
      "cash": 512915.50638474943,
      "ending": 3754632.6366363703
    },
    {
      "year": 2,
      "ebitda": 1442000.0,
      "interest": 363263.00440103817,
      "principal": 271060.5326314191,
      "service": 634323.5370324573,
      "tax": 219684.24889974046,
      "cfads": 972315.7511002596,
      "dscr": 1.5328388343415795,
      "cash": 850907.7204525517,
      "ending": 3483572.1040049517
    },
    {
      "year": 3,
      "ebitda": 1485260.0,
      "interest": 334879.4245669305,
      "principal": 299444.1124655268,
      "service": 634323.5370324573,
      "tax": 237595.14385826737,
      "cfads": 997664.8561417325,
      "dscr": 1.5728012566096592,
      "cash": 1214249.039561827,
      "ending": 3184127.991539425
    },
    {
      "year": 4,
      "ebitda": 1529817.8,
      "interest": 303523.7130234284,
      "principal": 330799.82400902885,
      "service": 634323.5370324573,
      "tax": 256573.52174414293,
      "cfads": 1023244.2782558571,
      "dscr": 1.6131267697283938,
      "cash": 1603169.7807852267,
      "ending": 2853328.1675303965
    },
    {
      "year": 5,
      "ebitda": 1575712.3340000003,
      "interest": 268884.64874240174,
      "principal": 365438.88829005556,
      "service": 634323.5370324573,
      "tax": 276706.92131439963,
      "cfads": 1049005.4126856006,
      "dscr": 1.6537387491454927,
      "cash": 2017851.65643837,
      "ending": 2487889.2792403414
    }
  ]
}

The calculations originate in curriculum.finance, independently of Excel formulas. The instructor workbook is a separate linked solution. Reconcile any difference using units, timing, tax convention, source perimeter and rounding; do not overwrite a failing formula with this number.

Solution method and assessment

Build 120 monthly senior periods, aggregate annual debt service, model five-year taxes, CFADS and retained cash. No interim distributions; non-interest-bearing seller note remains full standby until permitted payoff. Exit Year 5 at 4x EBITDA with 3% costs.

Stress revenue by 10%, 20%, 30% while fixed costs remain fixed in Year 1. Derive 1.25x, 1.15x and 1.0x CFADS thresholds; distinguish the EBITDA-based historical test.

Inspect the supporting schedules in order: source assumptions, operational or transaction drivers, cash implications, claims allocation, checks and recommendation. Require the learner to explain why an input change moves the answer. Review all five rubric dimensions separately. Unfunded uses, hidden senior balloon, omitted seller claim, duplicated NWC, ineligible earnout or concealed covenant failure is critical.

The full worked chapter supplies the narrative reasoning. The student packet withholds these completed results. Native Excel/LibreOffice recalculation remains a separate compatibility check from the available formula-engine tests.