This first workout tells us that the equity of Nordstrand Plc was acquired for 2,000. The acquirer used 30% equity financing to complete the transaction. And we're told to assume that Nordsrtand's net debt was not refinanced. There were no advisory fees, and no cash was used in the acquisition. And we're asked to construct the sources and uses of funds table. So that's what we've got underneath here. We've got our uses of funds table here first and underneath that our sources of funds. Well for our uses of funds we've actually just got one item here, the equity purchase price. Up in the question text we're told that it was acquired for 2,000. So let's put that straight in. Now I can total up my uses of funds and its just one item, and we'll sum that up, 2,000. Now let's go to our sources of funds. So how are we going to fund this 2,000? Well the first one we were told again in the question. Our equity financing is going to be 30 %. So I'll take the 2,000 (equity purchase price) and I'll multiply it by 0.3. Great. So of the 2,000 use of funds we've managed to source 600 of it. Where's the rest going to come from? Well that's the plug. Debt financing will be that plug. I go up to my total uses of funds, 2,000. I subtract of 600 that we managed to find so that means 1,400 must be leftover. Great. Do I have total sources of funds that balances against total uses of funds? Yes I've got exactly the same number. Now let's go to workout B. And the question says... "Restate your answer to the previous workout assuming that Nordstrand's net debt of 1,200 was also refinanced in the transaction". So I'm going to start with my equity purchase price, exactly the same as in the previous question. It was the 2,000. So that's my initial use of funds, I've got to buy the company (the equity purchase price). But I've now got another use of funds, I need to refinance the net debt of the target. Maybe the target's bankers, they've said "no, we've got no interest in this at all, you're going to have to find yourself some new bankers" Well that's okay, the amount that we need to refinance is 1,200 (so I'll just type that straight in there). My total uses of funds is now the sum of the two items above. And that's gone up quite a lot, 3,200 now. Now I need my equity financing, and it's going to be the same 30% that we used in workout A. But what's it 30% of? And the answer is it's just going to be 30% of the equity purchase price. So multiply that by 0.3. But why is that? Well let's decide what equity financing really means. Equity financing here means we're going to issue shares to the target shareholders. So instead of paying them all in cash, we're going to say "hey, why don't you have some shares in the brand new company" So let's take an extreme scenario where we're going to have 100% equity financing. So I go to the target shareholders, pay them just in shares, fantastic. But now I go to the target's bank and I say "hey we're going to refinance you guys, we're going to pay you in shares". And the bankers would look at us very strangely and say "hang on we don't want your shares, we need to paid off in cash". So our equity financing is always going to be a percentage of just the equity purchase price but not the refinanced net debt. So my debt financing is going to be a plug. I go up, take my total uses of funds of 3,200. Subtract out the 600 of financing we're already been able to source. And I'm now going to get 2,600 of debt financing. Quite a large increase from the previous scenario. And my total sources of funds matches my total uses. Now in workout C we're asked to restate your answer to the previous workout assuming that total fees were 40 were all paid in cash. Well for my equity purchase price and the refinanced net debt, I'm going to get the same numbers from workout B. There's our equity purchase price of 2,000 and if I copy that down... Refinanced debt of 1,200 appears. But now I need to type in the transaction fees of 40. My total uses of funds has now gone up to 3,240. What about my sources of funds? Well my equity financing is still going to be a percentage of just the equity purchase price. So 2,000 times by 0.3 and that hasn't changed. But my debt financing is going to be the total uses minus that 600, it's my plug figure. And it has grown, it's grown again because of those fees. Sum that up and my total uses of funds matches my total sources of funds.