Project number:

Date:
Class:

FINC 3132
Dr. Axel Grossmann

Group:
Name 1:
Name 2:
Name 3:
Name 4:

A) Sales Growth
Here are the company's historical sales. Hint: Use the Trend function to forecast sales for 2015.
(in thousands of dollars)

2009
2010
2011
2012
2013
2014
2015

Year
1
2
3
4
5
6
7

Sales
102,011
133,901
200,252
288,065
380,692
445,150

Growth Rate

B) Pro-Format Statements for 2015

Key Input Data:
Tax rate
Dividend growth rate
Interest on Short-term Securities
Interest rate on Short-term debt rd
Interest rate on long-term debt

Used in the
forecast
30%
15%
1%
3%
5%

December 31 Income Statements:

(in thousands of dollars)
2014
Sales
Expenses (excluding depr. & amort.)
EBITDA
Depreciation and Amortization
EBIT
Net Interest Expense
EBT
Taxes (30%)
Net Income
Common dividends
Addition to retained earnings (RE)

Forecasting
basis
Growth
% of sales

Ratios
$445,150
$378,378
85.0000%
$66,773
$7,388 % of fixed assets
11.00%
$59,385
$8,575 Interest rate x beginning of year debt
$50,810
$15,243
$35,567
$12,554
Growth
$23,013

Cumberland Industries December 31 Balance Sheets

(in thousands of dollars)
2014
Assets:
Cash and cash equivalents
Short-term investments
Accounts Receivable
Inventories
Total current assets
Fixed assets
Total assets

$71,450
$11,400
$103,365
$38,444
$224,659
$67,165
$291,824

Liabilities and equity

Accounts payable
Accruals
Notes payable
Total current liabilities
Long-term debt
Total liabilities
Common stock
Retained Earnings

Forecasting
basis

Ratios

% of sales
Previous
% of sales
% of sales

16.051%

% of sales

15.088%

$25,761
% of sales
$25,477
% of sales
$16,717
Previous
$67,955
$71,264
Previous
$139,219
$100,000
Previous
$52,605 Previous + RE

5.787%
5.723%

23.220%
8.636%

Total common equity

Total liabilities and equity

$152,605
$291,824

Quick Ratio
Debt Ratio

2.74
24%

Required assets =
Specified sources of financing (Liabilities and Equity)=
Additional funds needed (AFN) =

C) FCF for 2013

NOPAT15=

EBIT

(1-T)

Operating CA

Operating CL

Operating CA

Operating CL

=
=
NOWC15 =
=
=
NOWC14 =
=
=
NOWC15 =

NOWC

NOWC14 =

Fixed Assets15

FA

Fixed Assets14

=
=
FCF15 =

NOPAT

=
=

D) WACC
Input Data:
Current Bond Value
Par Value
Years to Maturity
Coupon Rate
Flotation Costs

$1,048
$1,000
20
6%
3%

NOWC

Cost of Debt:
YTM
PV
FV
PMT
N
I (semiannual)
YTM

(1,048.00)
1,000
30
40
2.80%

Adjusted for Flotation Cost:

PV
FV
PMT
N
I
Cost of Debt (rd)

-970.00
1000.00
0.00
40.00
0.08%

Cost of Retained Earnings:

Input Data:
Risk-free
Market Return
Beta
rs

2%
12%
1.1

Input Data:
Wd
Ws
Tax rate

40%
60%
30%

WACC

E) Intrinsic Value per Share

Input Data:
Growth rate
# of Shares Outstanding

g
(in thousands)

Free Cash Flow 2015

Free Cash Flow 2016
WACC

FCF1
FCF2
WACC

Operating Value in 2015

Operating Value in 2014
Total market Value
Intrinsic Value per Share

V1
V0
TMV0
P0

7%
5,000

Overvalued/Undervalued

F) Market Value Added (MVA)

Input Data:
Current market value

Book Value of Equity

Based on current stock price
Based on Intrinisc Value

$60.00

MVA
MVA

2015
Forecast

Include interest earned!!

2015
Without AFN

AFN

2015 adj.
With AFN

FA