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2002
1200000
180000
200000
-20000
8000
-12000
200000
188000
-300000
0
-112,000.00
0.73
2.703703704
0.4
1.5
0.25
3.53
0.111864
2003
2004
2005
2400000
3900000
5600000
360000
585000
840000
225000
250000
275000
135000
335000
565000
-54000
-134000
-226000
81000
201000
339000
225000
250000
275000
306000
451000
614000
-300000
-300000
-300000
0
0
0
6,000.00 151,000.00 314,000.00
NPV of FCFs
Present Value of forecasted FCFs - WACC
510,739.44
-989,260.56 Also look at the "discounted payback period"
Present Value of the Terminal Value
4,944,224.21
Why is that an important variable in this decision?
Total Value
5,454,963.65
Net Present Value
3,954,963.65
Implied Initial Amount of Debt
3,982,123.47
Note: the two valuation methods are not exactly equivalent since the FCF's are not a level perpetuity
2006
2007
7500000
1125000
300000
825000
-330000
495000
300000
795000
-300000
0
495,000.00 519,750.00
8,401,493.60
e. When a proportion of debt is chosen the WACC is the easier method to apply.
0.158
0.068
0.304
2002
1200000
180000
200000
-20000
8000
-12000
200000
188000
-300000
0
-112,000.00
2003
2400000
360000
225000
135000
-54000
81000
225000
306000
-300000
0
6,000.00
2004
3900000
585000
250000
335000
-134000
201000
250000
451000
-300000
0
151,000.00
2005
5600000
840000
275000
565000
-226000
339000
275000
614000
-300000
0
314,000.00
0.158
417,336.08
2,311,149.00
2,728,485.09
1,228,485.09
1,000,000.00 1,000,000.00 1,000,000.00 1,000,000.00
27,200.00
27,200.00
27,200.00
27,200.00
0.068
112,125.15
287,874.85
400,000.00 Note: this is equivalent to the 40% tax rate times the amount of debt ch
1,628,485.09
3,128,485.09
0.319643525
68,000.00
68,000.00
68,000.00
68,000.00
2006
2007
7500000
1125000
300000
825000
-330000
495000
300000
795000
-300000
0
495,000.00 519,750.00
4,812,500.00
68,000.00