1 2 3 4

Particulars 2001 2002 2003 2004

BCF 76436 89711 101966 115277 Ex. 9
Net Revenue New Markets 128313 144460 159985 175820
Less Corporate Expenses 3849 4334 4800 5275 Ex. 6
EBITDA 72587 85377 97166 110002
Less D&A 90420 90840 91260 91680
EBIT -17833 -5463 5906 18322
EBIAT -10700 -3278 3544 10993 EBIT(1-t)
Change in NWC 2127 2424 2330 2377
Capex 2100 2100 2100 2100
FCFF 75493 83039 90373 98197
PVIF 0.903 0.815 0.736 0.665
PVIF without Calc 0.903 0.815 0.736 0.664
PVCF 68170.16 67676.44291 66514.89 65202.5
PVCF without Calc 68171 67713 66547 1072804
Terminal Value 1512954
TV without Calc 1515190 1611151
1069804
EV 1272165
EV Without Calc 1275236

Mkt Value of Equity

1198831 18.43 times 65041 is 2000 new markers BCF

Note There is a constraint for growth rate in calculating TV

G should be lower than growth rate of long term economy (GDP)

Cost Of Debt
Bond Rating not given, so calc from financials
Ex. 6 Interest Expense 1999/Interest Bearing Debt of 1998
11.60% Pretax Cost of Debt
6.96% After Tax Cost of Debt

Amortization of finance costs should also be included in interest expense

Cost of Equity
6.35% Risk Free Rate
5.50% Consider risk premium of 5.5%
0.82 Radio One Asset Beta
Asset Beta is equal to
EB*E/V+DB*D/V
EB*420256/420256+82626 + 0.25*82626/420256+82626 502882 Total Value
0.04 Solving for Debt Beta second part of equation
 0.78 AB-DB Value
0.84 E/V 0.16 D/V
0.93 Equity Beta

11.48% Cost of Equity

10.75% WACC
 Capex Dep
2001 2100 420
2002 2100 420
As a % of Net Revenue from new markets 2003 2100 420
2004 2100 420
SLM as per Ex. 9 2005 2100 420

Losses will not be carried forward

Working Capital As % of Net Broadcast Revenue

1997 5750 17.77%

1998 7462 16.18%
1999 12264 15.01%
2000 17133
2001 19260
2002 21684
2003 24014
Discounted last year 2004 26391

2000 new markers BCF

Not going for average as trend is not fluctuating. So we willl tak

 Add D&A
90000 1 90420
90000 2 90840
90000 3 91260
90000 4 91680
90000 5 92100

uctuating. So we willl take latest year's %

 1 2 3 4 5 6
Particulars 2004 2005 2006 2007 2008 2009
EBITDA 110002 121002.64 133103 146413 161055 177160
Less D&A 91680 92100 92100 92100 92100 92100
EBIT 18322 28903 41003 54313 68955 85060
EBIAT 10993 17342 24602 32588 41373 51036
Add D&A 91680 92100 92100 92100 92100 92100
Less Capex 2100 2100 2100 2100 2100 2100
Less Change in NWC 2377 2615 2876 3164 3480 3828
FCFF 98196 104727 111726 119424 127893 137208
PVIF 0.664 0.600 0.542 0.490 0.442 0.400
PVCF 65202 62836 60555 58518 56529 54883
Add 2001, 02, 03 68171 67713 66547
EV 1376807

Equity Value 1300402

BCF 65041
Multiple 19.99

WC 87203 95923 105516 116067 127674 140441

Growth by 10%
 7 8 9 10 11 12
2010 2011 2012 2013 2014 2015 Terminal Value
194876 214364 235800 259380 285318 313850 323265
92100 92100 92100 92100 92100 92100 2100 Cash Flow Ad
102776 122264 143700 167280 193218 221750 321165 Referes only to NWC
61666 73358 86220 100368 115931 133050 192699
92100 92100 92100 92100 92100 92100 2100
2100 2100 2100 2100 2100 2100 2100
4211 4632 5095 5605 6165 6782 7460 Terminal Value
147455 158726 171125 184763 199765 216268 185239 2393270
0.361 0.326 0.294 0.265 0.240 0.216 2609537
53231 51745 50311 48962 47944 563660

154485 169934 186927 205620 226182 248800

87203