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Valuation Problem

- The firm's sales, fixed assets, operating costs, depreciation, tax rate, debt, and shares are given for 2019-2021. Sales are forecast to grow 6% annually. - Forecasts show sales, fixed assets, operating working capital, depreciation, EBIT, NOPAT, FCFF, and terminal value calculations for 2019-2021 and 2022-2024. - The firm value is calculated to be $19,444,622 using a WACC of 11% and terminal growth rate of 4%. Equity value per share is $121.30.

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PriyankaPori
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41 views

Valuation Problem

- The firm's sales, fixed assets, operating costs, depreciation, tax rate, debt, and shares are given for 2019-2021. Sales are forecast to grow 6% annually. - Forecasts show sales, fixed assets, operating working capital, depreciation, EBIT, NOPAT, FCFF, and terminal value calculations for 2019-2021 and 2022-2024. - The firm value is calculated to be $19,444,622 using a WACC of 11% and terminal growth rate of 4%. Equity value per share is $121.30.

Uploaded by

PriyankaPori
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Fixed Assets (2019) 2400

Sales (2019) 6200


Other info.
Cash operating cost 70% of Sales
Depreciation 10% of Fixed Asset
Sales growth rate 6%
Tax rate 30%
Operating working capital 10% of sales
Volume of Debt 1,250
Number of Common Shares 150
Terminal Growth rate of FCFF is 4%. WACC is 11%
The firm is running in full capacity.

Forecasts
2019 Actual 2020 2021
Sales 6200 6,572.00 6,966.32
Fixed Asset 2400 2,544.00 2,696.64
Increase in FA 144.00 152.64
Operating WC 620 657.20 696.63
Increase in Operating WC 37.20 39.43
Depreciation 240 254.40 269.66

2019 2020 2021


Net sales $6,200.00 $6,572.00 $6,966.32
(-) Cash Operating Cost $4,340.00 $4,600.40 $4,876.42
(-) Depreciation $240.00 $254.40 $269.66
EBIT $1,620.00 $1,717.20 $1,820.23
(-) Tax (30%) $486.00 $515.16 $546.07
NOPAT $1,134.00 $1,202.04 $1,274.16
+ Depreciation $240.00 $254.40 $269.66
(-)Increase in Operating WC 37.20 39.43
(-) Invest. in Fixed Assets 144.00 152.64
FCFF $1,374 $1,275.24 $1,351.75
+ Terminal Value
FCFF $1,275.24 $1,351.75
Note: Terminal Growth of FCFF 4%
PV of FCFF $19,444.62
+ Surplus Cash & Marketable securities 0
FIRM VALUE $19,444.62
(-) Value of Debt 1,250
(-) Value of Preferred Stock 0
Value of Equity $18,194.62
Number of Shares 150
Value per Share 121.30
2022 2023 2024
7,384.30 7,827.36 8,297.00
2,858.44 3,029.94 3,211.74
161.80 171.51 181.80
738.43 782.74 829.70
41.80 44.31 46.96
285.84 302.99 321.17

2022 2023 2024


$7,384.30 $7,827.36 $8,297.00
$5,169.01 $5,479.15 $5,807.90 FCFF
$285.84 $302.99 $321.17 Terminal Value= FCFF*(1+g)/(WACC-g)
$1,929.45 $2,045.21 $2,167.93
$578.83 $613.56 $650.38
$1,350.61 $1,431.65 $1,517.55
$285.84 $302.99 $321.17
41.80 44.31 46.96
161.80 171.51 181.80
$1,432.86 $1,518.83 $1,609.96
$23,919.422
$1,432.86 $1,518.83 $25,529.38
23919.42233156
1+g)/(WACC-g)

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