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INPUTS FOR VALUATI ONCurrent InputsEnter the current revenues of the firm = 12,406$Enter current capital invested in the firm = 20,000$ {As a nave estimate, you can use BV of debt +BV of Equity)Enter the current depreciation = 233$Enter the current capital expenditures for the fir 298$Enter the change in Working Capital in last year 115$

Enter the value of current debt outstanding = -$Enter the number of shares outstanding = 1,500.00

High Growth Period Your InputsEnter the growth rate in revenues for the next 5 years = 25.00%

What will all operating expenses be as a % of revenues in the fi 70.00%(Operating expenses include depreciation: This is equal to (1-Pre-tax Operating M

How much debt do you plan to use in financing investments? 0%

Enter the growth rate in capital expenditures & depreciation 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 PeriodEnter the growth rate in revenues = 6.00%

Enter operating expenses as a % of revenues in stable period = 75.00%

Enter capital expenditures as a percent of depreciation in this p 200.00% See capital expenditure worksheet (capex.xls) for details.

How much debt do you plan to use in financing investments? 5.00%

Enter interest rate of debt in stable period = 7.50%

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Terminal Value (in '05)

COSTS OF EQUITY AND CAPITAL1 2 3 4 5 6 7 8 9

Cost of Equity 13.38% 13.38% 13.38% 13.38% 13.38% 13.21% 13.05% 12.88% 12.72%

Proportion of Equity 100.00% 100.00% 100.00% 100.00% 100.00% 99.00% 98.00% 97.00% 96.00%After-tax Cost of Debt 5.44% 5.44% 5.44% 5.44% 5.44% 5.31% 5.18% 5.06% 4.93%

Proportion of Debt 0.00% 0.00% 0.00% 0.00% 0.00% 1.00% 2.00% 3.00% 4.00%

Cost of Capital 13.38% 13.38% 13.38% 13.38% 13.38% 13.13% 12.89% 12.65% 12.40%

Cumulative WACC 113.38% 128.54% 145.73% 165.22% 187.32% 211.92% 239.23% 269.48% 302.91%

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

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

1995 1996 1997 1998 1999 2000 2001 2002 2003

Value of Firm by year 80,367$ 88,453$ 96,954$ 105,760$ 114,703$ 123,542$ 132,250$ 140,844$ 149,448$

$ Value of Debt -$ -$ -$ -$ -$ 1,235$ 2,645$ 4,225$ 5,978$

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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 10 (96)$ This reconciles the assumptions on stable growth, ROC and Capital Investe

= 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%

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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$

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 re

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%

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EVA Valuation

lect terminal ROC)

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