Q1) You are trying to estimate the free cashflow to the firm for Lafayette Enterprises, a

furniture-manufacturing firm, from its most recent financial statements. The income
statement for the firm is provided below:
Revenues $1,000
- Operating Expenses $ 600
- Depreciation $ 150
Net Income $ 250
- Interest Expenses $ 50
Earnings before tax $ 200
Taxes paid $ 80
Net Income $ 120
You can assume that the firm paid its marginal tax rate on taxable income and that
capital expenditures amounted to $225 million in the most recent financial year.
Working capital increased by $ 20 million. Estimate the free cashflow to the firm in the most
recent financial year

EBIT 200
Less:- tax (80/200 rate)=40% -50
NOPLAT 150
Add:- Depr +150
Less:- WC -20
Less:- Capex -225
FCFF 55

Q2) The following projections for Apex limited (all values in Million):-
Particulars 1 2 3 4 5
Profit after tax 60 75 72 80 90
Fixed Assets (net) 300 360 380 410 440
Net current assets 80 100 110 120 130

Debt 220 250 260 280 300

Cost of capital is 16%. The FCF will grow at 12% after 5 years. Determine Free cash flow to
Equity. Fixed Assets (net),Net Current assets and Debt are the estimated balance sheet
numbers.

Q3) Determine value of Multisoft Ltd based on following information :-

Revenues Mn 320, EBIT = Mn 90, Capital expenditure = Mn 100, Depreciation = Mn 60,
Working capital as a % of revenue = 20%.Tax rate = 30%
Inputs for high growth
Length = 5 yrs, growth in revenues, depreciation, EBIT and capital expenditure = 40%, Working
capital as a % of revenues = 20%, Cost of debt = 15% (pre-tax), Debt-equity = 1:1, Risk free
rate = 12%, market risk premium = 7%, Beta 1.3
Inputs for stable growth
Growth in revenues, depreciation, EBIT and capital expenditure = 10%, Working capital as a %
of revenues = 20%, Cost of debt = 13% (pre-tax), Debt-equity = 0.5:1, Risk free rate = 11%,
market risk premium = 5%, Beta 1.0

Q4) Determine value of Exotica Ltd based on following information :-

Revenues Mn 4000, EBIT (12.5% of revenue) = Mn 500, Capital expenditure = Mn 300,
Depreciation = Mn 200, Working capital as a % of revenue = 30%.Tax rate = 40%
Inputs for high growth
Length = 5 yrs, growth in revenues, depreciation, EBIT and capital expenditure = 10%, Working
capital as a % of revenues = 30%, Cost of debt = 15% (pre-tax), Debt-equity = 1:1, Risk free
rate = 13%, market risk premium = 6%, Beta 1.333
Inputs for stable growth
Growth in revenues and EBIT= 6%, Capital Expenditures are offset by depreciation, Working
capital as a % of revenues = 30%, Cost of debt = 15% (pre-tax), Debt-equity = 2:3, Risk free
rate = 12%, market risk premium = 7%, Beta 1.0

Q5) Determine value of Multiform Ltd based on following information :-

Base Year :- Revenues Mn 1600, EBIT = Mn 240, Capital expenditure = Mn 200, Depreciation
= Mn 120, Working capital as a % of revenue = 25%.Tax rate = 35% (at all time), Paid up equity
capital (Rs 10 par) Mn 180, Market value of Debt Mn 600
Inputs for high growth
Length = 4 yrs, growth in revenues, depreciation, EBIT and capital expenditure = 20%, Working
capital as a % of revenues = 25%, Cost of debt = 15% (pre-tax), Debt-equity = 1.5:1, Risk free
rate = 12%, market risk premium = 7%, Beta 1.25
Inputs for stable growth
Growth in revenues, depreciation and EBIT = 10%, Working capital as a % of revenues = 25%,
Capital expenditures are offset by depreciation, Cost of debt = 14% (pre-tax), Debt-equity = 1:1,
Risk free rate = 12%, market risk premium = 6%, Beta 1.0

Q5) Jones is a diversified firm with holdings in both the manufacturing and retail sectors.
The firm has a cost of capital of 10% and it is a stable growth firm that expects to see after tax
operating income grow 5% a year in the long term.
a. Estimate the Value/FCFF ratio for this firm.
b. If the firm earns a return on capital of 12.5%, and faces a 30% tax rate, estimate
the Value/EBIT multiple for this firm.(Reinvestment rate = g/ROC)
Q1) The following information is available for Co. D, a pharma co. which is being valued. EBITDA 400 Mn;
Book value of assets 1000 Mn; Sales 2500 Mn. Based on an evaluation of a number of listed pharma
companies, A B & C ltd have found to be comparable to company D. The financial information is as
follows :- (values in million)
Particulars A B C
Sales 1600 2000 3200
EBITDA 280 360 480
Book value of 800 1000 1400
assets
Enterprise value 2000 3500 4200
(EV)
Three valuation multiples have been considered :-
Particulars A B C
EV/EBITDA 7.1 9.7 8.8
EV/BOOK VALUE 2.5 3.5 3
EV/SALES 1.25 1.75 1.31

Apply the average multiples to the financial numbers of D ltd and determine the Enterprise Value of D Ltd.