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Cost Approach Case Study Solution
Cost Approach Case Study Solution
Co.
Acquisition
Case
Indirect method
7,342 mln
Syrup mixer 1
Gross Book Value
1,39
Total trend
factor
Average Xrate
1,17
Year
Average xrate
EUR
Average xrate
USD
2012Q4
40,23
30,37
10,181 mln
1,18
Price trend Factor
Date
2012Q4
107,5
2000Q2
2001Q2
2002Q2
2003Q2
2004Q2
2005Q2
2006Q2
2007Q2
2008Q2
2009Q2
2010Q2
2011Q2
2011Q4
2012Q2
2012Q4
Euro area
(18
countries)
85,61
89,88
88,71
89,05
90,42
89
91,26
94,83
101,72
97,65
99,17
106,49
107,47
108,48
112,09
28,13
29,18
31,36
30,67
28,81
28,31
27,14
25,55
24,87
31,77
30,38
29,39
31,11
30,37
France
Italy
86,37
91,17
90,87
91,4
92,6
91,3
92,83
95,97
104,63
100,83
99
107
107,87
107,23
109,47
83,97
86,41
87,41
89,79
90,49
90,06
91,42
91,98
102,97
102,01
99,87
103,32
105,06
106,31
107,5
1,55
1,54
1,35
1,16
1,12
1,14
1,18
1,15
1,10
0,91
1,00
0,98
1,01
1,00
Germany
88,63
90,82
93,9
100,8
94,88
98,87
107,57
108,87
109,5
113
USA
Russia
82,34
176,5
183,7
101,56
101,24
Asset Name
Year
25,99
26,13
29,69
34,68
35,82
35,16
34,11
35,03
36,45
44,20
40,22
40,90
39,86
40,23
XRATES
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Q4 2012
Average xrate EUR Average xrate USD xrate trend factor -eur
RCN indirect
Syrup mixer #1
7 342 045
1,18
1,18
1,39
10 180 790
Syrup mixer #2
5 283 452
n/a
n/a
n/a
n/a
4 922 904
1,14
1,20
1,37
6 752 853
5 831 277
1,00
1,11
1,11
6 450 047
3 117 450
1,35
1,20
1,63
5 088 606
8 600 000
1,16
1,20
1,39
11 943 001
12 000 000
1,15
1,12
1,29
15 448 903
10 000 000
1,15
1,12
1,29
12 874 086
Packaging robot
combined with
palletizer
7 500 000
1,00
1,04
1,04
7 804 973
CIP washer
3 000 000
1,18
1,18
1,39
4 159 927
Technological pumps
1 245 000
1,15
1,17
1,34
1 671 025
Technological piping
1 000 000
1,15
1,04
1,19
1 192 839
Water preparation
1 475 003
1,00
1,23
1,23
1 813 586
Electrical networks
2 000 000
1,14
1,04
1,19
2 384 827
2 000 000
1,15
1,20
1,38
2 764 021
Storage racks
5 000 000
1,14
1,04
1,19
5 962 068
Lift trucks
3 000 000
n/a
n/a
n/a
n/a
2,5
( 3 )0,66
VFL#2
I&CC
VFL#3
9 026 551
12 874 086
Piping, electrical networks, monitoring and
testing equipment
RCN for the core equipment
85 986 638
12%
10 318 397
7%
8 598 664
10%
6 019 065
7%
11 972 900
3%
12 332 087
13 619 496
2
6 450 047
3t
4t
0,28
4 367 274
0,36
5 615 067
0,36
5 615 067
7 798 704
4t
15 597 408
General Age/Life
Syrup mixer #1
Syrup mixer #2
Interim storage tank #1
Interim storage tank #2
Interim storage tank #3
Vial filling line #1
Vial filling line #2
Vial filling line #3
Packaging robot combined with palletizer
CIP washer
Technological pumps
Technological piping
Water preparation
Electrical networks
Monitoring and testing equipment
Storage racks
Lift trucks
Date On
NUL
RUL
2006
1988
2005
2010
2002
2003
2007
2007
2010
2006
2007
2007
2008
2005
2007
2005
various
15
15
25
25
25
22
22
22
12
12
12
10
12
15
7
10
10
9
-9
18
23
15
13
17
17
10
6
7
5
8
8
2
3
-
9
3
18
23
15
13
17
17
10
6
7
5
8
8
2
3
-
Physical
depreciation
40%
80%
28%
8%
40%
41%
23%
23%
17%
50%
67%
50%
33%
47%
71%
70%
Determining depreciation
Syrup mixer #1
VFL #1
Annual changeover loss
400 000
Discount rate
15%
Technological pumps
(%) = ^ (/)
= 1
=
MV
1 119 235
2013
2014
2015
2016
400 000
400 000
400 000
400 000
DR
15%
15%
15%
15%
DF
0.870
0.756
0.658
0.572
347 826
302 457
263 006
228 701
loss
Loss
Accumulated loss
1 141 991
Market Approach
Price (excl.VAT), rubles
Linear
R2=0,35
Exp-model
R2=0,30
y = -33261x + 740683
R = 0,353
600000
500000
400000
300000
200000
100000
0
0
Regression
Observations:
Linear - model
20
10
12
Asset name
lifting
capacity
Height
Year of
manufacturing
Age
Price
ETV 213 #1
1 300
3 000
2005
507 856
1 300
3 000
2007
574 378
3 000
2008
607 639
640 900
R2
0,3
ETV 213 #2
ETV 213 #3
1 300
Model
Y=-33261*x+740683
ETV 213 #4
1 300
3 000
2009
TOTAL PRICE FOR 4 ETV 2 330 773
Final Estimations
Asset Name
Syrup mixer #1
Syrup mixer #2
Interim storage tank #1
Interim storage tank #2
Interim storage tank #3
Vial filling line #1
Vial filling line #2
Vial filling line #3
Packaging robot combined with
palletizer
CIP washer
Technological pumps
Technological piping
Water preparation
Electrical networks
Monitoring and testing
equipment
Storage racks
Lift trucks
Physical
depreciation "direct dollar"
Physical
depreciation percentage
-1 400 000
40%
80%
28%
8%
40%
41%
23%
23%
Functional
obsolescence "direct dollar"
Market value
Cost approach
(before
economic
obsolescence)
5 268 474
1 805 310
3 144 438
5 165 862
3 369 040
6 372 596
10 487 012
10 487 012
RCN indirect
RCN direct
RCN final
10 180 790
n/a
6 752 853
6 450 047
5 088 606
11 943 001
15 448 903
12 874 086
9 026 551
4 367 274
5 615 067
5 615 067
13 619 496
13 619 496
10 180 790
9 026 551
4 367 274
5 615 067
5 615 067
11 943 001
13 619 496
13 619 496
7 804 973
7 804 973
17%
6 478 127
927
025
839
586
827
10 318 397
8 598 664
4 159 927
1 671 025
10 318 397
1 813 586
2 384 827
50%
67%
50%
33%
47%
2 079 963
551 438
5 159 198
1 215 103
1 263 958
2 764 021
6 019 065
6 019 065
71%
1 745 529
5 962 068
n/a
5 962 068
-
70%
-
1 788 620
2 330 773
4
1
1
1
2
159
671
192
813
384
1 141 991
Current Assets
Obsolete
Not Included!
Raw Materials
Finished Goods
22 080 000
34 155 000
Book Value
Uncollectible AR
35 000 000
10 000 000
Cash
Book Value
Fair Value
Inventories
Accounts
Receivable
Differential method
(+)
(+)
Fair Value of the land rental agreement = Land rental agreement pretax value*(1 Tax rate)
1 335 731 RUB
Supply Contract
CF = (Total Sales COGS Variable SG&A D&A)*(1-t) +D&A - NWC
EBIT
2014
2015
2016
2017
2018
CF
5420,17
5977,60
6431,57
7370,30
8362,00
8924,39
DCF
4713,19
4519,92
4228,86
4213,99
4157,39
3858,26
Long-Term Liabilities
ACQUISITION
PRICE
450 000 000
FAIR FALUE
OF EQUITY
237 016 512
GOODWILL
212 984 498
Contribution
Vorozhtsov Sergey: M&E valuation, presentation, analytical report
Glinskaya Anastasiya: intangible assets valuation, analytical report,
presentation
Lomparter Elena: inventory valuation, analytical report, presentation
Rozhin Alexey: M&E valuation, analytical report, presentation