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    Fcffeva

    Uploaded by

    Shobhit Goyal
    1) The document provides inputs for valuing a firm using a discounted cash flow model, including current revenues, capital invested, depreciation, capital expenditures, debt, and shares outstanding. 2) It also provides inputs for estimating cash flows over a high growth period with 25% annual revenue growth and a stable period with 6% revenue growth, including operating expenses, capital expenditures, debt levels, and discount rates. 3) The model estimates firm value of $80.37 million using these inputs and discounting future free cash flows to the present.

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    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd

    Fcffeva

    Uploaded by

    Shobhit Goyal
    73 views6 pages
    1) The document provides inputs for valuing a firm using a discounted cash flow model, including current revenues, capital invested, depreciation, capital expenditures, debt, and shares outstanding. 2) It also provides inputs for estimating cash flows over a high growth period with 25% annual revenue growth and a stable period with 6% revenue growth, including operating expenses, capital expenditures, debt levels, and discount rates. 3) The model estimates firm value of $80.37 million using these inputs and discounting future free cash flows to the present.

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    fcffeva.xls

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    1) The document provides inputs for valuing a firm using a discounted cash flow model, including current revenues, capital invested, depreciation, capital expenditures, debt, and shares outstanding. 2) It also provides inputs for estimating cash flows over a high growth period with 25% annual revenue growth and a stable period with 6% revenue growth, including operating expenses, capital expenditures, debt levels, and discount rates. 3) The model estimates firm value of $80.37 million using these inputs and discounting future free cash flows to the present.

    Copyright:

    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
    Download as xls, pdf, or txt
    73 views6 pages

    Fcffeva

    Uploaded by

    Shobhit Goyal
    1) The document provides inputs for valuing a firm using a discounted cash flow model, including current revenues, capital invested, depreciation, capital expenditures, debt, and shares outstanding. 2) It also provides inputs for estimating cash flows over a high growth period with 25% annual revenue growth and a stable period with 6% revenue growth, including operating expenses, capital expenditures, debt levels, and discount rates. 3) The model estimates firm value of $80.37 million using these inputs and discounting future free cash flows to the present.

    Copyright:

    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
    Download as xls, pdf, or txt
    of 6

    Page 1

    INPUTS FOR VALUATION


    Current Inputs
    Enter the current revenues of the firm = $ 12,406
    Enter current capital invested in the firm = $ 20,000 { As a na•ve estimate, you can use BV of debt + BV of Equity)
    Enter the current depreciation = $ 233
    Enter the current capital expenditures for the $ 298
    Enter the change in Working Capital in last y $ 115
    Enter the value of current debt outstanding = $ -
    Enter the number of shares outstanding = 1,500.00

    High Growth Period Your Inputs


    Enter the growth rate in revenues for the next 5 years = 25.00%
    What will all operating expenses be as a % of revenues in t 70.00% (Operating expenses include depreciation: This is equal to (1-Pre-tax Operating Margin))
    How much debt do you plan to use in financing investmen 0%
    Enter the growth rate in capital expenditures & depreciati 25.00%
    Enter working capital as a percent of revenues 7.50%
    Enter the tax rate that you have on corporate income 36.00%
    What beta do you want to use to calculate cost of equity = 1.25
    Enter the current long term bond rate = 6.50%

    Enter the market risk premium you want to use = 5.50%


    Enter your cost of borrowing money = 8.50%

    Stable Period
    Enter the growth rate in revenues = 6.00%
    Enter operating expenses as a % of revenues in stable peri 75.00%
    Enter capital expenditures as a percent of depreciation in t 200.00% See capital expenditure worksheet (capex.xls) for details.
    How much debt do you plan to use in financing investmen 5.00%
    Enter interest rate of debt in stable period = 7.50%

    Page 1
    Page 2

    What beta do you want to use in the stable period = 1.10


    ESTIMATED CASHFLOWS
    Base 1 2 3 4 5 6 7 8 9 10
    Growth in Revenue 25.00% 25.00% 25.00% 25.00% 25.00% 21.20% 17.40% 13.60% 9.80% 6.00%
    Growth in Deprec'n 25.00% 25.00% 25.00% 25.00% 25.00% 21.20% 17.40% 13.60% 9.80% 6.00%
    Revenues $ 12,406 $ 15,508 $ 19,384 $ 24,230 $ 30,288 $ 37,860 $ 45,886 $ 53,871 $ 61,197 $ 67,194 $ 71,226
    Operating Expenses
    % of Revenues 70.00% 70.00% 70.00% 70.00% 70.00% 70.00% 71.00% 72.00% 73.00% 74.00% 75.00%
    - $ Operating Expen $ 8,684 $ 10,855 $ 13,569 $ 16,961 $ 21,202 $ 26,502 $ 32,579 $ 38,787 $ 44,674 $ 49,724 $ 53,420
    EBIT $ 3,722 $ 4,652 $ 5,815 $ 7,269 $ 9,086 $ 11,358 $ 13,307 $ 15,084 $ 16,523 $ 17,471 $ 17,807
    Tax Rate 36.00% 36.00% 36.00% 36.00% 36.00% 36.00% 36.00% 36.00% 36.00% 36.00% 36.00%

    EBIT (1-t) $ 2,382 $ 2,977 $ 3,722 $ 4,652 $ 5,815 $ 7,269 $ 8,517 $ 9,654 $ 10,575 $ 11,181 $ 11,396
    + Depreciation $ 233 $ 291 $ 364 $ 455 $ 569 $ 711 $ 862 $ 1,012 $ 1,149 $ 1,262 $ 1,338
    - Capital Expenditur $ 298 $ 373 $ 466 $ 582 $ 728 $ 909 $ 1,263 $ 1,616 $ 1,969 $ 2,322 $ 2,675
    - Change in WC $ 115 $ 233 $ 291 $ 363 $ 454 $ 568 $ 602 $ 599 $ 549 $ 450 $ 302
    = FCFF $ 2,202 $ 2,664 $ 3,329 $ 4,162 $ 5,202 $ 6,503 $ 7,514 $ 8,451 $ 9,206 $ 9,671 $ 9,756

    Page 2
    Page 3

    Terminal Value (in '05) $ 167,813


    COSTS OF EQUITY AND CAPITAL
    1 2 3 4 5 6 7 8 9 10
    Cost of Equity 13.38% 13.38% 13.38% 13.38% 13.38% 13.21% 13.05% 12.88% 12.72% 12.55%
    Proportion of Equity 100.00% 100.00% 100.00% 100.00% 100.00% 99.00% 98.00% 97.00% 96.00% 95.00%
    After-tax Cost of Debt 5.44% 5.44% 5.44% 5.44% 5.44% 5.31% 5.18% 5.06% 4.93% 4.80%
    Proportion of Debt 0.00% 0.00% 0.00% 0.00% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00%
    Cost of Capital 13.38% 13.38% 13.38% 13.38% 13.38% 13.13% 12.89% 12.65% 12.40% 12.16%
    Cumulative WACC 113.38% 128.54% 145.73% 165.22% 187.32% 211.92% 239.23% 269.48% 302.91% 339.75%

    Present Value $ 2,349 $ 2,590 $ 2,856 $ 3,149 $ 3,472 $ 3,546 $ 3,532 $ 3,416 $ 3,193 $ 52,265

    FIRM VALUATION
    Value of Firm $ 80,367
    - Value of Debt $ -
    Value of Equity $ 80,367
    Value of Equity per Share $ 53.58

    1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
    Value of Firm by year $ 80,367 $ 88,453 $ 96,954 $ 105,760 $ 114,703 $ 123,542 $ 132,250 $ 140,844 $ 149,448 $ 158,314
    $ Value of Debt $ - $ - $ - $ - $ - $ 1,235 $ 2,645 $ 4,225 $ 5,978 $ 7,916

    Page 3
    EVA Valuation

    Base 1 2 3 4 5
    EBIT (1-t) $ 2,382 $ 2,977 $ 3,722 $ 4,652 $ 5,815 $ 7,269
    - WACC (CI) $ 2,675 $ 2,717 $ 2,769 $ 2,835 $ 2,917
    EVA $ 302 $ 1,005 $ 1,883 $ 2,980 $ 4,352
    Terminal EVA
    PV $ 267 $ 782 $ 1,292 $ 1,804 $ 2,323
    PV of EVA $ 60,463
    + Capital Invested $ 20,000
    + PV of Chg Capital in Yr $ (96) This reconciles the assumptions on stable growth, ROC and Capital Invested
    = Firm Value $ 80,367

    WACC 13.38% 13.38% 13.38% 13.38% 13.38%


    ROC 14.89% 18.32% 22.47% 27.44% 33.33%
    Capital Invested $ 20,000 $ 20,314 $ 20,706 $ 21,197 $ 21,810

    Calculation of Capital Invested


    Initial $ 20,000 $ 20,000 $ 20,314 $ 20,706 $ 21,197 $ 21,810
    + Net Cap Ex $ 81 $ 102 $ 127 $ 159 $ 198
    + Chg in WC $ 233 $ 291 $ 363 $ 454 $ 568
    Ending $ 20,000 $ 20,314 $ 20,706 $ 21,197 $ 21,810 $ 22,576

    Cumulated WACC 113.38% 128.54% 145.73% 165.22% 187.32%

    Page 4
    EVA Valuation

    6 7 8 9 10 Terminal Year
    $ 8,517 $ 9,654 $ 10,575 $ 11,181 $ 11,396 $ 12,080
    $ 2,964 $ 3,039 $ 3,134 $ 3,244 $ 3,364 $ 3,524
    $ 5,552 $ 6,615 $ 7,441 $ 7,938 $ 8,032 $ 8,556
    $ 138,838
    $ 2,620 $ 2,765 $ 2,761 $ 2,620 $ 43,229

    C and Capital Invested

    13.13% 12.89% 12.65% 12.40% 12.16% 12.16%


    37.72% 40.94% 42.67% 42.76% 41.20% 41.69%
    $ 22,576 $ 23,579 $ 24,782 $ 26,151 $ 27,661 $ 28,975 (Adjusted to reflect terminal ROC)

    $ 22,576 $ 23,579 $ 24,782 $ 26,151 $ 27,661


    $ 401 $ 604 $ 820 $ 1,060 $ 1,338
    $ 602 $ 599 $ 549 $ 450 $ 302
    $ 23,579 $ 24,782 $ 26,151 $ 27,661 $ 29,301

    211.92% 239.23% 269.48% 302.91% 339.75%

    Page 5
    EVA Valuation

    reflect terminal ROC)

    Page 6

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