Year

1
2
3
4
5
6
7
8
9
10

FCFF
Terminal Value
Present Value
($3,526.30)
($3,098.58)
($1,761.25)
($1,359.90)
($902.69)
($612.45)
($471.71)
($281.22)
$21.87
$11.46
$391.84
$181.79
$832.27
$344.93
$948.67
$354.60
$1,407.33
$479.42
$1,461.44 $28,683.17
$9,509.89
$5,529.92

Valuing Options or Warrants when there is dilution

Enter the current stock price =
$1.86
Enter the strike price on the option =
13.375
Enter the expiration of the option =
8.4
Enter the standard deviation in stock prices =
50.00% (volatility)
Enter the annualized dividend yield on stock =
0.00%
Enter the treasury bond rate =
6.50%
Enter the number of warrants (options) outstanding =
38
Enter the number of shares outstanding =
886.47

VALUING WARRANTS WHEN THERE IS DILUTION

Stock Price=
1.86 # Warrants issued=
Strike Price=
13.375 # Shares outstanding=
Adjusted S (DO NOT ENTER)= 1.79902474 T.Bond rate=
Adjusted K (DO NOT ENTER)=
13.375 Variance=
Expiration (in years) =
8.4 Annualized dividend yield=
Div. Adj. interest rate=
d1 =
N (d1) =

-0.283025273
0.388578732

d2 =
N (d2) =

-1.732162947
0.041622277

Value of the call =

Number of Options =
Value of Options =

$0.38
38
$14.31

38
886
6.50%
0.2500
0.00%
6.50%

YearRevenues EBITDA Depreciation

1 #####
-$95
$1,580
2 #####
$0
$1,738
3 #####
$346
$1,911
4 #####
$831
$2,102
5 #####
$1,371
$1,051
6 #####
$1,809
$736
7 #####
$2,322
$773
8 #####
$2,508
$811
9 #####
$3,038
$852
10 #####
$3,589
$894
Term. Year
#####
$4,187
$939

EBIT
NOL at beginning of year
Taxes
-$1,675
$2,075
0
-$1,738
$3,750
$0
-$1,565
$5,487
$0
-$1,272
$7,052
$0
$320
$8,324
$0
$1,074
$8,004
$0
$1,550
$6,931
$0
$1,697
$5,381
$0
$2,186
$3,685
$0
$2,694
$1,498
$419
$3,248
$0
$1,137

EBIT (1-t)
-$1,675
-$1,738
-$1,565
-$1,272
$320
$1,074
$1,550
$1,697
$2,186
$2,276
$2,111

0.13
0.41666667
YearCap ExCap Ex Growth
Depreciation
Depreciation Growth
Net Cap ex
1 ##### -20.00%
$1,580
10.00%
$1,852
2 ##### -50.00%
$1,738
10.00%
-$22
3 ##### -30.00%
$1,911
10.00%
-$710
4 #####
5.00%
$2,102
10.00%
-$841
5 #####
5.00%
$1,051
-50.00%
$273
6 #####
5.00%
$736
-30.00%
$654
7 #####
5.00%
$773
5.00%
$687
8 #####
5.00%
$811
5.00%
$721
9 #####
5.00%
$852
5.00%
$758
10 #####
5.00%
$894
5.00%
$795
Term.####
Year

Capital Expenditures
$3,431
$1,716
$1,201
$1,261
$1,324
$1,390
$1,460
$1,533
$1,609
$1,690
$2,353

Depreciation Change in working

FCFFcapital Present Value
$1,580
$0
-$3,526
-$3,270.85
$1,738
$46
-$1,761
-$1,515.31
$1,911
$48
-$903
-$720.38
$2,102
$42
-$472
-$349.17
$1,051
$25
$22
$15.02
$736
$27
$392
$249.55
$773
$30
$832
$491.64
$811
$27
$949
$519.81
$852
$21
$1,407
$715.26
$894
$19
$30,145 $14,210.82
$939
$20
$677

0.7527
0.078108
$10,346.39

General FCFF Discount Model

A General FCFF Valuation Model

An n-stage Model
This model is designed to value a firm, with changing margins, revenue growth,
and other parameters.
Assumptions
1. The firm is expected to grow at a higher growth rate in the first period.
2. The growth rate will drop at the end of the first period to the stable growth rate.
3. The free cashflow to equity is the correct measure of expected cashflows to stockholders.

The user has to define the following inputs:

1. Length of high growth period
2. Expected growth rate in earnings during the high growth period.
3. Capital Spending, Depreciation and Working Capital needs during the high growth period.
4. Expected growth rate in earnings during the stable growth period.
5. Inputs for the cost of capital. (Cost of equity, Cost of debt, Weights on debt and equity)

Page 5

General FCFF Discount Model

Inputs to the model

Current EBIT =

($1,895.00)

(in currency)

Current Net Income =

($4,040.00)

(in currency)

Current Dividends =

( in currency)

Current Interest Expense =

$415.00

(in currency)

Current Capital Spending

$4,289.00

(in currency)

Current Depreciation =

$1,436.00

(in currency)

Tax Rate on Income =

35.00%

(in percent)

Current Revenues =

$3,804.00

( in currency)

Current Working Capital =

($110.50)

(in currency)

Chg. Working Capital =

($63.00)

(in currency)

Cash and Non-operating assets =

$2,260.00

Book Value of Debt =

$7,647.00

( in currency)

Book Value of Equity =

$6,884.00

(in currency)

NOL carried forward =

$2,075.00

Weights on Debt and Equity

Is the firm publicly traded ?

If yes, enter the market price per share =

& Number of shares outstanding =
& Market Value of Debt =

Yes

( Yes or No)

$1.86

(in currency)

886.47

(in #)

$4,922.75

( in currency)

If no, do you want to use the book value debt ratio ?

(Yes or No)

If no, enter the debt to capital ratio to be used =

(in percent)

Enter length of extraordinary growth period =

10

(in years)

No

(Yes or No)

Costs of Components
Do you want to enter cost of equity directly?
If yes, enter the cost of equity =

(in percent)

If no, enter the inputs to the cost of equity

Beta of the stock =

Page 6

General FCFF Discount Model

Riskfree rate=

4.80%

(in percent)

Risk Premium=

4.00%

(in percent)

Enter the cost of debt for cost of capital calculation

12.80%

( in percent)

Earnings Inputs
Please enter year-specific inputs for each of the following variables:
Year

Growth Rate in EBITDA/Revenue Growth Rate in Growth Rate in Working Capital

Revenue

Capital Spending Depreciation

-3%

as % of Revenue

-20%

10%

3.00%

-50%

10%

3.00%

40.00%

30.00%

5.00%

-30%

10%

3.00%

20.00%

10.00%

5%

10%

3.00%

10.00%

15.00%

5%

-50%

3.00%

10.00%

18.00%

5%

-30%

3.00%

10.00%

21.00%

5%

5%

3.00%

8.00%

24.00%

5%

5%

3.00%

6.00%

27.00%

5%

5%

3.00%

10

5.00%

30.00%

5%

5%

3.00%

Enter growth rate in stable growth period

5.00%

(in percent)

Enter EBITDA as % of Revenue in stable phase

30.00%

(in percent)

Enter Working Capital as % of Revenue in stable phase 3.00%

(in percent)

Will the beta change in the stable period?

Yes

(Yes or No)

If yes, enter the beta for stable period =

1.00

Compounded Avg

10%

Do you want to change the debt ratio in the stable growth period?

Yes

(Yes or No)

If yes, enter the debt ratio for the stable growth period =

40%

(in percent)

Will the cost of debt change in the stable period?

If yes, enter the new cost of debt =

Yes

(Yes or No)

8.00%

( in percent)

Page 7

General FCFF Discount Model

Capital Spending and Depreciation in Stable growth period

Do you want to compute the reinvestment rate in stable growth from fundamentals?
Yes
If yes, enter the return on capital in stable growth =

7.36%

Page 8

(Yes or No)

General FCFF Discount Model

If no, enter capital expenditures as % of depreciation in steady state:

110%

Output from the program

Cost of Equity =

16.80%

Equity/(Debt+Equity ) =

25.09%

After-tax Cost of debt =

8.32%

Debt/(Debt +Equity) =

74.91%

Cost of Capital =

10.45%

Page 9

(in percent: > 100%)

General FCFF Discount Model

$3,804.00

$5,325.60

$6,923.28

$8,307.94

$9,138.73

- Operating Expenses
$3,899.10

$5,325.60

$6,577.12

$7,477.14

$7,767.92

- Depreciation

$1,579.60

$1,737.56

$1,911.32

$2,102.45

$1,051.22

EBIT

($1,674.70)

($1,737.56)

($1,565.15)

($1,271.65)

$319.59

EBIT (1-t)

($1,674.70)

($1,737.56)

($1,565.15)

($1,271.65)

$319.59

+ Depreciation

$1,579.60

$1,737.56

$1,911.32

$2,102.45

$1,051.22

- Capital Spending $3,431.20

$1,715.60

$1,200.92

$1,260.97

$1,324.01

$45.65

$47.93

$41.54

$24.92

Revenues

- EBIT*t

- Chg. Working Capital

Free CF to Firm

($3,526.30)

($1,761.25)

($902.69)

($471.71)

$21.87

Present Value

($3,098.58)

($1,359.90)

($612.45)

($281.22)

$11.46

NOL

$3,749.70

$5,487.26

$7,052.41

$8,324.07

$8,004.48

3.00

3.00

3.00

3.00

3.00

Cost of Equity

16.80%

16.80%

16.80%

16.80%

16.80%

Cost of Debt

12.80%

12.80%

12.80%

12.80%

12.80%

Debt Ratio

74.91%

74.91%

74.91%

74.91%

74.91%

Cost of Capital

13.80%

13.80%

13.80%

13.80%

13.80%

Cum. WACC

1.13804

1.29513

1.47390

1.67735

1.90889

Index

Cost of Capital Computation

Tax Rate
Beta

Growth Rate in Stable Phase =

FCFF in Stable Phase =

5.00%
$676.92

Cost of Equity in Stable Phase =

8.80%

Equity/ (Equity + Debt) =

60.00%

AT Cost of Debt in Stable Phase =

5.20%

Debt/ (Equity + Debt) =

40.00%

Cost of Capital in Stable Phase =

7.36%

Value at the end of growth phase =

$28,683.17

Page 10

General FCFF Discount Model

Present Value of FCFF in high growth phase =

($3,518.92)

Present Value of Terminal Value of Firm =

$9,048.85

Value of the firm =

$5,529.92

+ Cash and Marketable Securities =

$2,260.00

Market Value of Debt =

$4,922.75

Market Value of Equity =

$2,867.17

Value of Options Outstanding (See option worksheet) =

Value of Equity in Common Stock =

1
$3,804
($95)
$1,580
($1,675)
($1,675)
$1,580
$3,431
($3,526)

$14.31
$2,852.86

Value of Equity per Share =

Revenues
EBITDA
- Depreciation
EBIT
EBIT (1-t)
+ Depreciation
- Cap Ex
- Chg WC
FCFF

4991.6447

$3.22

2
$5,326
$1,738
($1,738)
($1,738)
$1,738
$1,716
$46
($1,761)

3
$6,923
$346
$1,911
($1,565)
($1,565)
$1,911
$1,201
$48
($903)

Page 11

4
$8,308
$831
$2,102
($1,272)
($1,272)
$2,102
$1,261
$42
($472)

5
$9,139
$1,371
$1,051
$320
$320
$1,051
$1,324
$25
$22

General FCFF Discount Model

Model

margins, revenue growth,

Page 12

General FCFF Discount Model

Page 13

General FCFF Discount Model

2.548309587

Page 14

General FCFF Discount Model

Page 15

General FCFF Discount Model

ercent: > 100%)

Page 16

General FCFF Discount Model

10

Terminal Year

$10,052.60

$11,057.86

$11,942.49

$12,659.04

$13,291.99

$13,956.59

$8,243.13

$8,735.71

$9,434.57

$9,620.87

$9,703.16

$9,769.62

$735.86

$772.65

$811.28

$851.85

$894.44

$939.16

$1,073.61

$1,549.50

$1,696.64

$2,186.32

$2,694.40

$3,247.82

$418.60

$1,136.74

$1,073.61

$1,549.50

$1,696.64

$2,186.32

$2,275.80

$2,111.08

$735.86

$772.65

$811.28

$851.85

$894.44

$939.16

$1,390.22

$1,459.73

$1,532.71

$1,609.35

$1,689.82

$2,353.38

$27.42

$30.16

$26.54

$21.50

$18.99

$19.94

$391.84

$832.27

$948.67

$1,407.33

$1,461.44

$676.92

$181.79

$344.93

$354.60

$479.42

$461.05

$6,930.87

$5,381.37

$3,684.73

$1,498.40
1

16%

35%

2.60

2.20

1.80

1.40

1.00

1.00

15.20%

13.60%

12.00%

10.40%

8.80%

8.80%

11.84%

10.88%

9.92%

8.96%

6.76%

5.20%

67.93%

60.95%

53.96%

46.98%

40.00%

40.00%

12.92%

11.94%

10.88%

9.72%

7.98%

7.36%

2.15547

2.41288

2.67534

2.93548

3.16982

0.679347826

Page 17

General FCFF Discount Model

6
$10,053
$1,809
$736
$1,074
$1,074
$736
$1,390
$27
$392

7
$11,058
$2,322
$773
$1,550
$1,550
$773
$1,460
$30
$832

8
$11,942
$2,508
$811
$1,697
$1,697
$811
$1,533
$27
$949

9
$12,659
$3,038
$852
$2,186
$2,186
$852
$1,609
$21
$1,407

Page 18

10
$13,292
$3,589
$894
$2,694
$2,276
$894
$1,690
$19
$1,461

Terminal Year
$13,957
$4,187
$939
$3,248
$2,111
$939
$2,353
$20
$677